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GNOC Corp. v. Powers

A-2719-04T2, (N.J. Super. App. Div. 2006) (Unpublished)

VALUABLES; INNKEEPER’S ACT; CASINOS—Casino chips are considered to be “valuables” under the Innkeeper’s Act even though, for some other purposes, they may not be considered property of a gambler until redeemed.

A hotel-casino sued a guest to collect a large gambling debt. The guest countersued for negligence, claiming that the casino was negligent when a second room key was issued to his room by an unknown person who promptly stole his winnings while he was sleeping at night. The hotel-casino claimed that, under the Innkeeper’s Act, N.J.S.A. 29:2-1 to 29:2-4, it was immune from liability for the theft of the guest’s gambling chips. The Innkeeper’s Act provides a hotel with immunity from liability for the loss of a guest’s valuables if the hotel maintains a safe and places a conspicuous notice in each guest’s room advising the guests that a safe is available to safeguard valuables and that the hotel would not be held liable if a guest’s valuables were stolen from his or her room. The guest claimed that the hotel-casino was not immune from liability because gambling chips did not constitute “valuables” within the meaning of the statute. He argued that gambling chips are not items of value, but are merely an accounting mechanism to evidence a debt owed by a casino. Therefore, the guest argued that the hotel-casino was liable for the theft of the gambling chips from his room. The guest also argued that the gambling chips were not “valuables” because the chips did not belong to the guests, but were property of the casino. The Court disagreed, noting that the Innkeeper Statute’s definition of “valuables” was not exhaustive, and the failure to include gambling chips within the definition did not exclude them from being deemed “valuables” within the meaning of the statute. The Court also distinguished a case in which the U.S. Court of Appeals found that gambling chips are not the property of guests but merely an accounting mechanism for tracking the debt. In that case, the Court of Appeals rejected the Internal Revenue Service’s claim that gambling chips constituted income. That court refused to find that gambling chips were a gambler’s property for the purposes of income taxation until they were cashed in. That court noted the practicality that a gambler could, in fact, lose all of his chips and have nothing to cash in. Here, the Court noted that the situation was entirely different. In the other case, the Court of Appeals did not want to impute income tax liability on a gambler before he cashed in. In this case, however, the issue was the hotel-casino’s liability for the theft of a guest’s gambling chips and the Court rejected the guest’s claims that the chips were not “valuables” within the meaning of the Innkeepers Act.

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