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In re Petition of Adamar of New Jersey Inc.

Decided: January 19, 1988.

IN THE MATTER OF THE PETITION OF ADAMAR OF NEW JERSEY, INC., REQUESTING A DECLARATORY RULING CONCERNING THE OFF-SITE ACCEPTANCE OF PAYMENTS ON NON-RETURNED COUNTER CHECKS, ETC.


On appeal from a Final Administrative Decision of the Casino Control Commission.

J. H. Coleman, O'Brien and Havey. The opinion of the court was delivered by Havey, J.A.D.

Havey

In these consolidated appeals, five casino licensees*fn1 challenge the Casino Control Commission's (Commission) denial of the casinos' application to collect outstanding counter checks "in the field" or at branch offices. We now affirm.

In 1980, several casino licensees sought to implement passive collection activities for accepting payments from patrons on outstanding patron counter checks at casino branch offices located within and outside New Jersey. "Outstanding counter

checks," are patron gaming checks which have not yet been deposited in the bank for collection pursuant to N.J.S.A. 5:12-101(c). "Passive collection" is a procedure whereby a licensed casino employee is sent at the patron's request to a location other than the cashiers' cage for receipt of payment of a patron's gaming checks. The Commission notified the casino licensees that in order to implement branch office procedures for passive collection, the casinos would have to seek formal Commission approval. In response, the casinos submitted internal control procedures for branch office collection and were granted approvals, ratified by the Commission, on a case-by-case basis from 1983 to 1985. The casinos receiving approval were Atlantis, Sands, Golden Nugget, Resorts and Boardwalk.

In 1985, Adamar of New Jersey, Inc. (Adamar), doing business as the Tropicana Hotel and Casino, submitted procedures for "field" collections of outstanding counter checks at unspecified locations, including a patron's home or place of business. After the Division of Gaming Enforcement interposed an objection, Adamar petitioned the Commission seeking a declaratory ruling that off-site acceptance of payments on outstanding counter checks did not violate the Casino Control Act, N.J.S.A. 5:12-1, et seq., or its attendant regulations, N.J.A.C. 19:45-1.1, et seq. Under Adamar's proposed collection procedure, the patron would be given a receipt by the collecting employee but the original counter check would not be released from the cashiers' cage until the funds were received and accepted at the cage. It was stressed that the proposed collection activity would be instigated only on the initiative of the patron.

During the pre-hearing conferences, the present appellants intervened and joined Adamar's petition. After the hearing, the Commission denied the casinos' request to receive payments on outstanding counter checks either in the field or in branch offices. In denying the request, the Commission noted that under N.J.S.A. 5:12-101, the act's credit provision, there can be no "collection" on an outstanding counter check other than bank deposit for payment, except for redemption or consolidation

of the check by the patron, and that the statute permits collection efforts only on returned counter checks. "Returned counter checks" are checks which are issued by a patron to a casino for gaming credit and which have been returned by a depository bank unpaid for insufficient funds. See N.J.S.A. 5:12-101(e). The Commission also reviewed the comprehensive regulations pertaining to receipt of cash or cash equivalents and redemption of outstanding counter checks, and concluded that such receipt and redemption must occur within the well-monitored casino cashiers' cage. Also, while acknowledging that the Commission and Division staff had approved collection procedures at branch offices and that it had ratified these procedures, the Commission determined it was empowered to reopen and vacate the approvals to protect the public interest and integrity of the casino industry. Finally, it granted the casinos' request to collect returned counter checks both in the field and at branch offices.

Appellants contend that disapproval of off-site collection of counter checks was overbroad and incorrect as a matter of law because: (1) neither the act nor the regulations prohibit passive collection on outstanding counter checks in the field; (2) such collection does not constitute "redemption" in violation of the act or regulations; (3) the prior case law relied on by the Commission is inapposite and unpersuasive, and (4) there is no logical distinction between collection of returned counter checks and outstanding counter checks. Appellants also challenge the Commission's revocation of prior approvals to collect outstanding counter checks at branch offices as being unfair and unreasonable.

Generally, we are not bound by an agency's determination of a strictly legal issue. Fedders Financial Corp. v. Taxation Div. Dir., 96 N.J. 376, 392 (1984); Mayflower Securities Co. v. Bureau of Securities, 64 N.J. 85, 93 (1973). However, we accord substantial deference to an interpretation ...


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