Las Vegas Sun

March 28, 2024

Casino credit company to settle class-action lawsuits

Casino ATM and credit services company Global Cash Access Holdings Inc. has agreed to settle the last two class-action lawsuits pending against it.

The Las Vegas company operates in Nevada and 13 other states providing casino ATM cash withdrawals, credit card advances and check-approval services.

It also runs a credit bureau that casinos use to help decide whether to provide credit to gamblers. Global Cash said that in 2009, it processed more than 101 million transactions involving $21.7 billion in cash disbursed to gaming patrons.

Global Cash today said its insurers have agreed to pay $5.85 million to suing shareholders and their attorneys to settle a federal securities class action lawsuit.

Two suits were filed by stockholders in 2008 against some of GCA's current and former directors, the company’s former chief executive officer, former chief financial officer and others. The suits were later combined.

The shareholders alleged the company had discovered it had underpaid commissions to casinos and would have to make up those payments to casinos -- but failed to promptly disclose the problem to investors.

The suits said that when the problem was disclosed in December 2007 and Global Cash said it would have to spend $10 million to resolve the issues and correct accounting problems, the value of the company's stock plunged and $913 million in market capitalization evaporated.

A separate "derivative'' lawsuit, seeking to force the company to sue its own executives and directors over the same issues, was dismissed by a federal judge in May.

"We are very pleased to have this matter fully resolved. This was the last of several legacy issues that we have had to deal with over the past few years. The company has now reached a successful resolution of all of such pending issues and we can now fully focus on our business of providing leading cash access services without the further expenditure of any significant resources or funds in connection with defending this action," Global Cash Chief Executive Officer Scott Betts said today in a statement.

Another nationwide class action lawsuit was filed last July in federal court by a patron at the Meadows Casino in Pennsylvania charging Global Cash Access violated the Electronics Fund Transfer Act by failing to post on an ATM machine a required disclosure of fees.

The patron claimed in the lawsuit she was charged a $3 "terminal fee'' for an ATM transaction, even though there was nothing posted on the machine advising her she would be charged a fee.

Global Cash this month said that without admitting liability, it paid $500,000 to settle that suit and that its insurers may reimburse some of its expenses in the matter. The $500,000 will cover legal fees and expenses as well as payments to plaintiffs in the class action lawsuit.

Also this month, Global Cash said its fourth quarter profit rose even as revenue declined as casino patrons reduced spending nationwide because of the recession.

Global Cash earned $7.4 million or 10 cents per share, up from $3.5 million or 6 cents in the fourth quarter of 2008. Revenue for the 2009 quarter of $148.8 million was down from $176.3 million in 2008's fourth quarter.

The 2009 quarter included a special one-time gain of $2.75 million.

"As a result of the weaker than expected revenue, operating income and cash earnings per share from continuing operations were down 13 percent and 11 percent, respectively,'' Global Cash said in its earnings report.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy