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Last summer, a number of high-level marketing and client relations executives left Borgata to join Boardwalk upstart Ocean Casino Resort.
Shrewd business moves by Ocean? Or illegal poaching of proprietary data on Borgata’s biggest-spending guests? That is the case that has been before a federal court since last August.
But last week, Borgata amended its complaint with allegations that the lawsuit has done nothing to deter aggressive hiring practices by Ocean, the three-year-old property reborn from the shell of the star-crossed, multi-billion dollar Revel casino that closed in 2014.
Borgata attorneys allege that over the past year, Ocean “has systematically raided Borgata’s employee ranks in an illegal effort to increase Ocean’s competitiveness,” targeting a “laundry list” of those executives with the most trade secrets to transmit.
That list already included five top-level employees, most notably William Callahan, Borgata’s former vice president of relationship marketing; and Kelly Burke, former executive director of marketing.
“Many of these executives have since done precisely what Ocean hired them to do: employ their intimate knowledge of Borgata’s confidential information — including marketing strategies, player preferences, and player contact information — in an attempt to lure Borgata’s most important customers to Ocean.”
The case had been winding through U.S. District Court in Nevada, home of Borgata’s parent company MGM Resorts, but recently it was reassigned to federal court in New Jersey.
And in the new complaint, Borgata adds more accusations of “brazen” hiring practices.
“Soon after hiring the first two Borgata employees — both of whom were under contract forbidding their employment at competing casinos like Ocean’s — Ocean in short order hired three other marketing and customer service employees who had previously reported to one of the first hires. A little while later, Ocean hired five butlers and five other marketing and customer service professionals away from Borgata. And Ocean intends on hiring still more Borgata employees who can provide it with access to Borgata’s proprietary information.
“Ocean has also approached Borgata’s vendors with offers for exclusive relationships in an attempt to cut Borgata out of the Atlantic City market.”
It’s common knowledge that big-spending “whales” get elaborate treatment at casinos worldwide. But how much do they spend?
“These high-level patrons spend or gamble $1.5 to $4 million per visit and are collectively responsible for approximately $25 million in revenue each year.”
That’s a big number in any economic environment — but especially so in the age of COVID-19, where 2020 casino industry revenues in the city were down more than 40% even with online casino gaming available to offset some operator losses.
“In the current environment, government-mandated occupancy restrictions have combined with low visitation, low room rates, and low per capita spending to put pressure on Borgata and every other hotel casino in the Atlantic City market. Competition for high-level patrons is fierce, and Borgata’s ability to leverage hard-earned historical information about each of these most valuable customers is critical to its ability to maintain these valuable relationships.”
Callahan and his team allegedly “enrich close personal relationships with these patrons, including attending weddings, providing luxury accommodations, attending football and basketball games, and other social activities.
“They possessed detailed knowledge of these players’ particular wants and needs, permissions sought, accommodation preferences, schedules, gaming habits, credit requirements, comp requirements, staffing preferences, and other information about the players and their tendencies that Borgata relied upon to provide it with a competitive advantage in retaining these players during their visits to Atlantic City.”
Borgata attorneys allege that the scheme began last May, when a part-owner of Ocean met personally with Callahan and Burke “at the home of a mutual acquaintance.”
“The purpose of targeting Callahan and Burke was clear: Both individuals had access to and intrinsic knowledge of Borgata’s trade secrets, and if Ocean were successful in luring Callahan and Burke to breach their employment agreements, Ocean could take advantage of Borgata’s trade secrets for its own benefit just as the property was reopening for business.”
The next step, they say, was Callahan’s purchase of a new iPhone. He allegedly copied “Borgata’s customer information and other trade secrets to that phone, thereby ensuring his continuing access to this critical information.”
Callahan and Burke each left Borgata last summer.
“Neither Callahan nor Burke informed Borgata that they had accepted positions at Ocean. To the contrary, they both concealed the identity of their new employer. Though it did not deter them, their hesitance was warranted: both had accepted a role at Ocean substantially similar to the one they held at Borgata.”
Callahan’s new title at Ocean is “senior vice president of hotel operations” — a ruse, Borgata’s attorneys assert, because Callahan had no such supervisory experience.
The five butlers were added by Ocean two months ago, in an effort, Borgata’s attorneys smirk, “to help improve Ocean’s own middling standing” in terms of pampering of big-spending gamblers.
Next came Borgata’s director of communications, a social media manager, a public relations manager, a digital manager, and a digital specialist.
For what it considers this illegal “poaching,” Borgata is seeking “the immediate return of all trade secrets and all devices and documents containing trade secrets and other information” as well as an award of damages “as the court may deem just and proper.”