Hundreds of thousands of people in Las Vegas carry cards in their wallets to receive free buffets, concert tickets and other perks.
It is called a “boarding pass,” and is served by station casinos that own most of the large local casinos throughout the city. The company uses the card to track how often customers gamble.
It’s a powerful marketing tool that has been the subject of an expensive, behind-the-scenes legal battle between Station and Haras Entertainment, which may be underway since a federal appeals court ruled in favor of Station last week.
In July 2001, Harrah sued the station in federal court, alleging that the Station’s Boarding Pass Slot Club violated three patents held by Harrah’s. Harrah’s, the world’s largest casino company, has its own player tracking system called “Total Rewards.”
Total Rewards Card boasts the largest membership in the casino business. With the company’s acquisition of Caesars Entertainment last summer, Hara’s Card now has nearly 40 million names in its Total Rewards database.
More than any other casino company, Harrah credits slot clubs with accelerating revenue growth by keeping customers returning to Harrah’s properties instead of competing.
In a patent filed with the U.S. Patent and Trademark Office, Harrah’s claim is the first to offer a loyalty program that allows gamblers to earn points across multiple casinos. Such a program has been adopted by station casinos, as well as many other casino companies in Las Vegas and beyond.
The legal battle has serious consequences for the industry. Victory over the station may fuel future lawsuits against other casino companies that have slot clubs, endangering the programs. Instead, Hara’s company may now be less likely to sue competitors with similar programs.
On Nov. 15, the 9th U.S. Circuit Court of Appeals confirmed a previous federal court ruling that patents governing the gross compensation gambler loyalty program cannot be enforced against stations in court. The Court of Appeals has not issued an opinion explaining the ruling.
In May 2004, U.S. District Judge David Ezra ruled in favor of the station that two of the three patents in question were invalidated. In August 2004, a court declared the third year’s patent invalid and settled the remaining claims. Hae-ra appealed the ruling in September 2004.
Ezra ruled that Hara’s patent was invalid and unenforceable because it was too ambiguous and lacked “a proper written explanation of the claimed subject matter.”
Hara’s spokesperson David Straw said the company had not yet seen the latest Court of Appeals decision and that it was “premature” to comment on it. 온라인경마
Harrah’s could push for a retrial to the Court of Appeals or appeal the ruling to the U.S. Supreme Court.
Unless you work for any company, an industry insider suspects Harrah will drop the issue and move on.
“Things have changed,” said the source, who spoke on condition of anonymity. “The cat has already run away. Everyone has got it. And Hara’s has proved she can still dominate the market with their (slot club).”
Lori Nelson, a spokeswoman for the station, said the victory in the courtroom would not make much difference to the company or its customers.
Nelson said, “Our boarding pass program is operating as usual.” She said the station will continue to offer the program even during the lawsuit.
“The patent dispute dictates the specifics,” said Rob Phillips, a patent attorney at Greenberg Traug in Las Vegas who was not involved in the case.
“The subtle difference between the two player tracking systems could mean the difference between infringement and non-infringement,” said Phillips, who has represented the game company in the dispute over the player tracking system.
“In Hara’s case, we’ll have to evaluate different player tracking systems based on patents to determine whether it makes sense to file a lawsuit,” he said.
Jeffrey Compton, a Las Vegas-based gaming consultant and slot club expert, said neither Station nor Harras was the first to offer slot clubs where customers could gamble at one casino and redeem points at another property.
Compton said, “Both of them thought similar, but they did different things.” Compton said, “Both of them use direct mail as an effective approach to their customers, but each program has its pros and cons.
“Hara’s Total Rewards was probably the most effective slot club nationwide,” Compton said. “Hara’s club was the first club to aggressively market slot clubs as part of a larger effort to brand the company,” he said.
But by local standards, he said, the station’s slot club was “the most effective.”