Chuck E. Cheese sued – for illegal gambling

Update: On May 19, plaintiff Denise Keller dropped her case against Chuck E. Cheese’s.

Some parents of small children probably have fantasized about shutting down Chuck E. Cheese’s after an hours-long birthday party. Now a San Diego mother has filed a lawsuit designed to do just that — on the grounds that the ubiquitous children’s pizza outlets are operating illegal gambling businesses.

It’s not about anything going on behind closed doors. Instead, the lawsuit alleges that many of the activities the chain offers up to kids violate state and federal gambling laws.
The restaurant chain declined to comment.

The plaintiff is Denise Keller, mother of two daughters, aged three and five. According to her suit, she visited a Chuck E. Cheese’s and saw that the traditional games of skill, such as skee-ball and whack-a-mole, were being replaced by machines she thought resembled kiddie versions of slot machines.

Her class action lawsuit was filed in U.S. District Court in Southern California on March 29 against CEC Entertainment, Inc.the Kansas-based company which owns Chuck E. Cheese’s.

According to the lawsuit, “many games found at Chuck E. Cheese’s’s restaurants are illegal gambling devices that require little or no skill and are predominantly games of chance, much like a roulette wheel. With rare exception (none of which exist here), gambling is illegal in California.” The suit goes on to state that Keller “seeks restitution from CEC and an injunction prohibiting it from offering these devices to its customers in the future.”

A spokeswoman for CEC Entertainment, Brenda Holloway, would say only that “Our company policy is that we do not comment on pending litigation.”

Chuck E. Cheese’s bills itself as “a safe, wholesome environment” where “a kid can be a kid.” The outlets are favorites for birthday parties, and allow youngsters to play various games to win tickets, which may then be redeemed for stuffed animals and other prizes.

But the nature of those games has become a problem, according to Keller’s attorney Eric Benink of the San Diego firm Krause Kalfayan Benink & Slavens. The games in question, Benink said, come with the flashing lights and bright colors that both arcade games and slot machines have in common — but they take only a few seconds to play, and you can’t really get better at them.

“There was no fun involved in the game other than an opportunity to win a prize,” Benink said. He added, “It’s just pure random luck in terms of spinning out a result. That, we believe, is a slot machine as California penal code spells out.”

But the suit appears to be part of a growing opposition to arcades aimed at children, which some allege leads to problem gambling when those same children grow up. In fact, parents have sued the chain already in several southern states.

The chain’s problems with gambling laws appears to have been kicked off in 1996, when Alabama passed a law allowing the games, but not the prizes, offered by the restaurant chain. Sensing that this could be the first of several “Chuck E. Cheese’s Laws,” as it proved to be, the CEC challenged the law in court. In 2002, the Alabama Supreme Court ruled that offering prizes violated state gambling laws.

That same year, the Mississippi Supreme Court ruled that laws barring “games of chance” with prizes applied to arcades like Chuck E. Cheese’s. Lawyers for the chain argued that skee-ball and the other games were “games of skill,” and therefore not subject to the ruling.

The ruling led to a bill out of the Mississippi Senate exempting these types of low-stakes arcade games from the law. There was a similar bill in the South Carolina Legislature in 2008, but it was killed over concerns that it would create a loophole that would allow video poker into the state.

Benink said this case is different, because it’s the first time he knows of that an individual customer has sued Chuck E. Cheese’s for offering gambling to children. And, he said, the stakes are high.

“Early exposure to gambling increases one’s chances of being a gambling addict later in life,” Benink said.