Jackpot or Mistake? Man Sues Over $1.6M 'Jackpot'

Oct. 25, 2007— -- For about an hour last August, Gary Hoffman was a very lucky man.

Hoffman was playing the nickel slot machines at the Sandia Resort and Casino on an Indian reservation in New Mexico when he appeared to hit the jackpot: the machine said he won nearly $1.6 million.

"I became ecstatic," he said.

But the ecstasy was short-lived. Hoffman says in a lawsuit filed earlier this year that Sandia refused to pay, claiming that the machine malfunctioned. Instead, he said, they gave him about $385 and a few free meals at the casino.

"I won money, fair and square, and I've been cheated out of my winnings," Hoffman told ABC News.

The casino says it's not responsible for what it describes as a computer error and says it offered Hoffman the maximum payout of $2,500 for that particular slot machine. But, a jury may never decide who is right. Lawyers told ABC News that gamblers like Hoffman may have little legal recourse against Native American casinos, which sometimes operate beyond the reach of U.S. courts.

'I Was a Winner'

Hoffman, a retired Albuquerque city employee, was playing a "Mystical Mermaid" slot machine on the morning of Aug. 16, 2006, when he thought he hit it big.

The nickel slot said he'd won $1,597,244.10. Patrons and casino employees came to congratulate him. He even got a marriage proposal, Hoffman said. But, soon he was asked to come to an executive conference room, where he says he was told the casino refused to pay.

A casino employee "became quite intimidating with me, pointed his finger in my face and said, 'You didn't win. We're not paying you any money. Do you understand what I'm telling you? You're not getting any money,'" Hoffman said.

A technician from the slot machine manufacturer arrived at the casino within the hour and the casino cordoned off the machine.

"I was a winner and I walked out empty handed," Hoffman said.

Computer Malfunction

A technical report said the slot machine's computer malfunctioned, and incorrectly made it appear as if Hoffman won more than the machine is able to pay out. The slot machine has a disclaimer that says it pays a maximum of $2,500 and warns that malfunctions void all winnings, said Paul Bardacke, Sandia's lawyer.

The technical report, prepared for the casino by Gaming Laboratories International, showed that the machine's memory malfunctioned, causing the slot to treat a losing spin as a winner -- what the report called an "erroneous jackpot." The machine manufacturer, International Gaming Technology, blamed the problem on a software program.

Bardacke said Sandia offered Hoffman the maximum payout of $2,500.

"If he had gone into a bank and deposited $1,000 and got back a deposit slip that said a million dollars, he doesn't get to keep the balance," said Bardacke. "It doesn't work that way."

"He knew it was wrong; he knew it was incorrect," Bardacke said of the "jackpot." "That's why he took a picture of it immediately."

Hoffman appealed through the tribe's internal review process but lost. Then he took the casino to court.

Jeremy Kleiman, the vice chairman of the commercial gaming subcommittee of the American Bar Association, said that courts normally look at the player's expectations when deciding disputes about gambling.

"The information seemed to indicate this was a stand alone slot machine with a maximum payout of $2,500," he said. "So when you sit down your expectation is to win no more than $2,500. This is not a fraud situation where a carrot was fraudulently dangled in front of a customer's face."

Hoffman contends that the machine went into bonus play, which he said would have given him amplified winnings.  The GLI report, however, says that the machine was already going haywire when it went into the bonus rounds, and the casino maintains the maximum jackpot was $2,500.

Sovereign Immunity

Regardless, a jury may never get chance to hear Hoffman's case. Native American tribes, as independent nations, have their own court systems and can be sued in state courts only under limited circumstances. New Mexico law generally does not allow tribes to be sued in a state court over a contract dispute, Kleiman said.

Hoffman's lawyers say they should be able to sue the tribe over what they call big business. "They spent millions of dollars getting these customers, these gamblers, to come in and gamble money, then when someone hits it big, they say, 'Sorry, we are not going to pay you," said Hoffman's lawyer, Sam Bregman. "The jury is going to be outraged by that."

If the case does make it into court, expect more wrangling over who is ultimately responsible for the malfunction. GLI, hired by the casino to test the slot machine, said that the jackpot was caused by a problem with the machine's memory.

A spokesman for International Gaming Technology blamed a separate software program for the mix-up -- something GLI's technicians say is not possible.

As for Hoffman, Sandia officials say he has visited the casino more than 70 times in the first six months of 2007, a claim Hoffman did not dispute.

Cases like Hoffman's may still be bad for business, gambling experts say. "The players have to have an enormous amount of trust in the casino and in the slot machine," said slot machine expert John Robison.

"The player cannot go inside and look at that random number generator and figure out what really happened on the machine," he said. "If the machine tells you you won, well then I think you've won."

With reporting by Mary Kate Burke and Sarah Calvert