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Chipotle’s Mandatory Arbitration Agreements Are Backfiring Spectacularly

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A few years ago, the burrito chain Chipotle began requiring employees to sign mandatory arbitration agreements. The idea was to force the workers to give up their right to sue collectively over wage theft or workplace discrimination.

Chipotle’s plan seems to have worked out a little too well: The company is now facing a flood of arbitration cases from former employees determined to win the backpay they claim they are owed.

Facing potentially huge liabilities, Chipotle recently asked a federal judge to block the workers from seeking arbitration with lawyers who’d represented them in court ― despite the fact Chipotle had forced arbitration upon its workers via agreements they had to sign when they were hired.

The judge denied that request, calling Chipotle’s actions “unseemly.”

“This is their worst-case scenario, apparently ― and the scenario they asked for,” said Kent Williams, one of the attorneys representing the former Chipotle employees.

The mess all goes back to a Supreme Court ruling that was supposed to be a gift to powerful employers like Chipotle.

In May, the court ruled 5-4 in Epic Systems v. Lewis that it is legal for employers to require workers to sign arbitration agreements as a condition of employment. By signing them, workers agree they won’t sue the employer in class- or collective-action lawsuits. Instead, the workers will have to take any claims individually to arbitration, where they have no collective power.

The ruling was one of the most contentious of the court’s term, with all four liberal justices dissenting, including Justice Ruth Bader Ginsburg, who called the decision “egregiously wrong.” Employer lobbies cheered the ruling, while employee advocates said it would strip legal recourse from some of the most vulnerable workers.

One reason employers prefer arbitration over court is that workers are less likely to bring a claim at all. A single person trying to recoup back wages worth a few hundred dollars is going to have a hard time finding an attorney willing to take an arbitration case with so little at stake. Big lawsuits, by contrast, allow hundreds or even thousands of workers to band together against the company in pursuit of large claims. 

This is their worst-case scenario, apparently ― and the scenario they asked for.
Kent Williams, attorney

With the Epic Systems v. Lewis ruling, the Supreme Court immediately legitimized the arbitration clause Chipotle had started slipping into its employee welcome packet in 2014. The company’s chief compliance officer, David Gottlieb, explained in court how these supposedly voluntary agreements work:

“[I]f you choose not to agree to the arbitration agreement, for example, once you have been given notice and an opportunity to look at it, read it, ask any questions, download it, save it, whatever you want to do ― if you don’t, then you don’t have to be an employee,” Gottlieb said.

When the Epic ruling came down, Chipotle was dealing with a collective action lawsuit involving roughly 10,000 current and former workers who said Chipotle systematically stiffed them on pay, violating minimum wage and overtime regulations. But nearly 3,000 of those workers had signed arbitration agreements.

As HuffPost reported in August, the judge in the case, John Kane, ruled that the Epic decision compelled him to expel those plaintiffs from the suit. That was precisely the outcome Chipotle had been hoping for.

But instead of taking their claims and going home, more than 150 of those workers filed requests for arbitration.

Unlike a collective- or class-action lawsuit, all of those claims would be administered separately, and they could get very expensive for Chipotle. A single case can run tens of thousands of dollars in lawyers fees and payments to the arbitrator ― in this case, JAMS. The cost of litigating can dwarf the actual damages.

“If you start running the numbers on this thing, arbitration costs could top $30,000 or $50,000 [each],” said Williams. If hundreds or thousands of workers pursue cases, “You get up to, like, tens if not hundreds of millions of dollars very quickly, just in arbitration expenses.”

Under the arbitration rules, Williams said, the cases would be heard in the county where Chipotle last employed the worker in question, meaning the claims would be spread out all over the country. Chipotle has roughly 2,400 locations, according to its latest SEC filings. If so many cases were to move forward, they would present a logistical nightmare for the company.

Williams said Chipotle has so far refused to pay its share of the arbitration filing fee, which amounts to $1,100 per case, preventing those cases from proceeding. A similar situation has been unfolding for Uber drivers who also signed arbitration agreements. As Gizmodo reported earlier this month, some 12,000 drivers are pursuing arbitration with the ride-sharing giant. Like Chipotle, Uber has not paid the filing fees required in those cases.

A JAMS spokesperson declined to comment. Chipotle, which has said in the past that it does not comment on litigation, didn’t respond to emails about the matter.

But Chipotle’s court filings say plenty. The company wasn’t satisfied with getting nearly 3,000 mostly low-wage workers booted from a large lawsuit. It asked Kane, the judge, to forbid those workers from pursuing arbitration with Williams and his team as their attorneys. Their rationale: Because the workers had signed arbitration agreements, they never should have received notice about the collective-action lawsuit and become clients of Williams and his colleagues.

Kane rejected that argument, essentially saying that whatever happens in arbitration isn’t his court’s business. But once the arbitration filings started coming in, Chipotle appealed. “The arbitrations are going forward,” the company bemoaned in its filing, “causing immediate harm to Chipotle.”

The judge ruled against Chipotle yet again, and leveled a withering critique of the company’s legal strategy: “Chipotle’s attempts to delay and obfuscate the claims of the Arbitration Plaintiffs in both the courts and in arbitration (the forum to which it required these employees to submit) are unseemly.”

If so many arbitration cases were to move forward, they would present a logistical nightmare for Chipotle.

The pile of arbitration claims coming at Chipotle is pretty unique. It normally wouldn’t be worthwhile for a lawyer to pursue so many individual cases with modest claims, but Williams’ team and the workers had already built their case through the collective-action lawsuit. Ordinarily, Williams acknowledges, these workers probably wouldn’t have found lawyers to pursue arbitration for the $1,000 they believe they are owed.

In other words, mandatory arbitration will probably work out well for Chipotle in the long run, even if the company faces a potential legal debacle right now.

Companies like Chipotle like to say they prefer arbitration to the courts because it’s more efficient and better for both parties. But Chipotle’s resistance to arbitrating these claims ― after steering workers into arbitration ― suggests its policy was never really about fairness and efficiency, as Kane noted in a recent order.

“Congesting the federal courts with countless appeals to prolong arbitration proceedings for numerous employees provides no benefit to the public and flouts the efficient resolution Chipotle professes to seek,” the judge scolded.

Although Chipotle hasn’t paid filing fees yet, Williams said he plans to continue bringing more arbitration cases for any worker who wants to pursue arbitration after being kicked out of the lawsuit. After the new year, he hopes to file them in batches of 100 every couple of weeks, for as long as they come in.

“Everybody that we file for has individually retained us. We’ve talked to them and interviewed them,” Williams said. “These are all solid claims, and they’re not going away.”

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NY Online Sports Betting Bill Calls For Up To 14 Sportsbook Apps

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Gov. Andrew Cuomo‘s proposed New York sports betting model lacks support from two lawmakers who have pushed for online gambling in the state.

Sen. Joe Addabbo Jr. and Assemblyman Gary Pretlow released their 2021 NY online sports betting bill Thursday evening, though it looks a lot like their previous attempt.

The biggest difference is the bill calls for two skins per licensee instead of one each. There are four commercial casinos and three tribes that run casinos in New York that could offer online sports betting.

That would likely create a much more robust market in terms of handle but tax revenue could fall well short of what Cuomo expects from a lottery-style monopoly.

New York sports betting bill details

Many of the details in the jointly-filed S 1183 and A 1257 are similar to the 2019-20 version of Addabbo and Pretlow’s bill:

  • A one-time, $12 million fee is required for anyone operating a mobile sportsbook in the state.
  • Mobile sports betting revenue will be taxed at 12%. The state will set aside 5% of that tax revenue for problem gambling.
  • Official league data is still required for all in-play bets. The bill also calls for a royalty fee of 0.2% of handle to be paid to sports leagues. Assuming sportsbooks hold about 5% of bets, that means about 4% of sports betting revenue to the leagues.
  • Professional sports stadiums and arenas as well as off-track betting facilities can partner with a casino to have betting kiosks on-site.

The bill summary suggests $79 million in annual revenue to the state based on “conservative market estimates.” That might not be good enough for Cuomo, though.

Cuomo expects how much?

Gov. Cuomo has much higher expectations for what the state should make from sports betting.

The US sports betting industry was surprised to wake up Wednesday to find Cuomo had changed his stance on mobile sports betting. The excitement felt throughout the industry quickly turned to jokes, though, when the governor described his plan during the Q&A portion of his coronavirus press conference:

“We want to do sports betting the way the state runs the lottery where the state gets the revenues. Many states have done sports betting but they basically allow casinos to run their own gambling operations. That makes a lot of money for casinos but it makes minimal money for the state, and I’m not here to make casinos a lot of money. I’m here to raise funds for the state.”

Budget Director Robert Mujica explained that the standard sports betting model would net New York about $50 million a year in tax revenue. But a single-operator monopoly could bring in $500 million annually, Mujica said. We won’t know any other details of the proposal until Cuomo releases his budget.

Assuming a 50-50 revenue split and a 5% hold, New York’s sports betting market would have to take $20 billion in bets annually to make the state $500 million. That’s not impossible for any of the “crown jewel” states like California, Florida, New York and Texas.

It won’t happen in year one, though, and could take significantly longer to reach those heights under a monopoly.

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Global Online Gambling Market (2020 to 2027) – Size, Share & Trends Analysis Report

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Dublin, April 22, 2020 (GLOBE NEWSWIRE) — The “Online Gambling Market Size, Share & Trends Analysis Report by Type (Sports Betting, Casinos, Poker, Bingo), by Device (Desktop, Mobile), by Region (North America, Europe, APAC, Latin America, MEA), and Segment Forecasts, 2020 – 2027” report has been added to ResearchAndMarkets.com’s offering.

The global online gambling market size is expected to reach USD 127.3 billion by 2027, registering a CAGR of 11.5% from 2020 to 2027. The market is expected to gain traction over the forecast period. The growing popularity of betting across the globe and freemium model in online gambling are among the potential opportunities likely to unfold in the next few years.

Increasing adoption of smartphones and easy access to casino gaming platforms is currently driving the market. Factors such as increasing internet penetration and the availability of cost-effective mobile applications for betting are also expected to contribute to market growth over the forecast period. According to the American Gaming Association (AGA), as of 2018, approximately 2,800 sites are active online and offer activities including bingo, poker, and lottery.

Electronic Gambling Devices (EGDs) are inexpensive to run and easily available. These devices have an in-built software that mimics the experience of a local casino. For instance, a Video Lottery Terminal (VLT) uses advancing technology and can also be customized to electronic slot machines, spinning reel slot machines, video slot machines, and electronic poker games.

The spread of COVID19 has accelerated the demand for online gambling. Moreover, increasing digitalization coupled with secure digital payment options are also some factors contributing to online gambling market growth. The market is further expected to gain momentum over the forecast period attributed to the rising use of digital currency and websites provided by companies for betting and gambling.

Further key findings from the report suggest:

  • Ease of sports betting using a computer or smartphone coupled with the proliferation of sports betting ads across the globe is expected to propel segment growth over the forecast period
  • Online gambling service providers/operators are allowed to enter into agreements with individual players or customers to provide betting services for real money, in turn attracting more gamers
  • A large number of customers are using desktops for betting as downloading and installing casino software proves to be easier on desktops. This, in turn, is expected to propel the growth of the desktop segment
  • Online agencies, networks and exchanges, and third-party ad servers are used for advertising gambling websites of various companies
  • Europe is expected to continue its dominance over the forecast period. In the U.K., online gambling is legalized owing to safe practices and stringent regulations laid down by the government
  • Asia Pacific is anticipated to register the highest growth rate owing to the increased adoption of smartphones, a larger proportion of younger population, and legalization of online gambling in the region. The market size is largely influenced by the size of betting and pertinent outcome
  • Key companies in the online gambling market include William Hill PLC and Paddy Power Betfair PLC.

Key Topics Covered:

1. Methodology and Scope

2. Executive Summary
2.1 Online Gambling Market – Industry Snapshot & Key Buying Criteria, 2016 – 2027
2.2 Global Online Gambling Market, 2016 – 2027
2.2.1 Global online gambling market, by region, 2016 – 2027
2.2.2 Global online gambling market, by type, 2016 – 2027
2.2.3 Global online gambling market, by device, 2016 – 2027

3. Online Gambling Industry Outlook
3.1 Market Segmentation & Scope
3.2 Market Size and Growth Prospects
3.3 Online Gambling – Value Chain Analysis
3.3.1 Vendor landscape
3.4 Online Gambling Market Dynamics
3.4.1 Market driver analysis
3.4.1.1 Increasing investment in online gambling
3.4.1.2 Growing number of live casinos across the globe
3.4.2 Market restraint analysis
3.4.2.1 Increasing rate of cybercrimes
3.5 Penetration and Growth Prospect Mapping
3.6 Online Gambling Market – Porter’s Five Forces Analysis
3.7 Online Gambling Market – Key Company Market Share Analysis, 2019
3.8 Online Gambling Market – PESTEL Analysis
3.9 Impact of COVID 19 on the Online Gambling Market

4. Online Gambling Type Outlook
4.1 Online Gambling Market Share By Type, 2019
4.2 Sports Betting
4.2.1 Sports betting online gambling market, 2016 – 2027
4.3 Casinos
4.3.1 Casinos online gambling market, 2016 – 2027
4.4 Poker
4.4.1 Poker online gambling market, 2016 – 2027
4.5 Bingo
4.5.1 Bingo online gambling market, 2016 – 2027
4.6 Others
4.6.1 Other online gambling market, 2016 – 2027

5. Online Gambling Device Outlook
5.1 Online Gambling Market Share By Device, 2019
5.2 Desktop
5.2.1 Desktop online gambling market, 2016 – 2027
5.3 Mobile
5.3.1 Online mobile gambling market, 2016 – 2027
5.4 Others
5.4.1 Other device for online gambling market, 2016 – 2027

6. Online Gambling Regional Outlook
6.1 Online Gambling Market Share by Region, 2019
6.2 North America
6.2.1 North America online gambling market, 2016 – 2027
6.2.2 North America online gambling market, by type, 2016 – 2027
6.2.3 North America online gambling market, by device, 2016 – 2027
6.2.4 U.S.
6.2.4.1 U.S. online gambling market, 2016 – 2027
6.2.4.2 U.S. online gambling market, by type, 2016 – 2027
6.2.4.3 U.S. online gambling market, by device, 2016 – 2027
6.2.5 Canada
6.2.5.1 Canada online gambling market, 2016 – 2027
6.2.5.2 Canada online gambling market, by type, 2016 – 2027
6.2.5.3 Canada online gambling market, by device, 2016 – 2027
6.3 Europe
6.3.1 Europe online gambling market, 2016 – 2027
6.3.2 Europe online gambling market, by type, 2016 – 2027
6.3.3 Europe online gambling market, by device, 2016 – 2027
6.3.4 U.K.
6.3.4.1 U.K. online gambling market, 2016 – 2027
6.3.4.2 U.K. online gambling market, by type, 2016 – 2027
6.3.4.3 U.K. online gambling market, by device, 2016 – 2027
6.3.5 Germany
6.3.5.1 Germany online gambling market, 2016 – 2027
6.3.5.2 Germany online gambling market, by type, 2016 – 2027
6.3.5.3 Germany online gambling market, by device, 2016 – 2027
6.4 Asia Pacific
6.4.1 Asia Pacific online gambling market, 2016 – 2027
6.4.2 Asia Pacific online gambling market, by type, 2016 – 2027
6.4.3 Asia Pacific online gambling market, by device, 2016 – 2027
6.4.4 China
6.4.4.1 China online gambling market, 2016 – 2027
6.4.4.2 China online gambling market, by type, 2016 – 2027
6.4.4.3 China online gambling market, by device, 2016 – 2027
6.4.5 India
6.4.5.1 India online gambling market, 2016 – 2027
6.4.5.2 India online gambling market, by type, 2016 – 2027
6.4.5.3 India online gambling market, by device, 2016 – 2027
6.4.6 Japan
6.4.6.1 Japan online gambling market, 2016 – 2027
6.4.6.2 Japan online gambling market, by type, 2016 – 2027
6.4.6.3 Japan online gambling market, by device, 2016 – 2027
6.5 Latin America
6.5.1 Latin America online gambling market, 2016 – 2027
6.5.2 Latin America online gambling market, by type, 2016 – 2027
6.5.3 Latin America online gambling market, by device, 2016 – 2027
6.5.4 Brazil
6.5.4.1 Brazil online gambling market, 2016 – 2027
6.5.4.2 Brazil online gambling market, by type, 2016 – 2027
6.5.4.3 Brazil online gambling market, by device, 2016 – 2027
6.6 MEA
6.6.1 MEA online gambling market, 2016 – 2027
6.6.2 MEA online gambling market, by type, 2016 – 2027
6.6.3 MEA online gambling market, by device, 2016 – 2027

7. Competitive Landscape

7.1 William Hill PLC
7.1.1 Company overview
7.1.2 Financial performance
7.1.3 Product benchmarking
7.1.4 Strategic initiatives
7.2 Bet365 Group Ltd.
7.3 Paddy Power Betfair PLC
7.4 Betsson AB
7.5 Ladbrokes Coral Group PLC
7.6 The Stars Group Inc.
7.7 888 Holdings PLC
7.8 Sky Betting & Gaming
7.9 Kindred Group PLC
7.10 GVC Holdings PLC

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CT Governor throws support behind legal betting and igaming

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Giving his State of the State address yesterday (6 January), Lamont said 2020 had been one of the “most challenging and humbling” years of his life, due to the novel coronavirus (Covid-19) pandemic. 

This, he said, had prompted the state to work closely with neighbours such as Rhode Island, Massachusetts, New Jersey and New York to coordinate their response to the crisis. 

Lamont pledged to continue to leverage these relationships as part of Connecticut’s recovery from the pandemic.

He said Connecticut would work with its neighboring states and tribal partners on a path forward to “modernize gaming”, as well as working in the legislature to legalize marijuana. 

“Sports betting, internet gaming, and legalized marijuana are happening all around us,” Lamont added. “Let’s not surrender these opportunities to out-of-state markets or even worse, underground markets.”

His pledge to expand the state’s gambling market comes amid reports that Governor Andrew Cuomo is preparing to relax his stance against mobile wagering in neighbouring New York. 

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