Federal Judge Continues Scrutiny of Borgata Execs Who Left for Ocean Casino

Posted on: October 17, 2020, 06:38h. 

Last updated on: October 17, 2020, 09:21h.

Ed Silverstein @casinoorgedsilv Read More

Expertise: Legal, Tribal Gaming.

A top Borgata marketing executive who departed for the nearby Ocean Casino Resort in Atlantic City was recently ordered by a federal judge to turn over a personal cell phone for a forensic exam.

The employee, William Callahan, previously turned in a company phone that was given to him by Borgata, an MGM Resorts International gaming property. The court-approved inspection will look for Borgata trade secrets or proprietary data on VIP players that could be used at the competing casino, according to the Associated Press.

In her decision released this week, Nevada US District Court Judge Gloria Navarro also ordered Callahan to turn over forensic copies of the two phones, personal computers, or other devices linked to cloud‐based accounts.

He also must turn over log‐in data for cloud‐based programs that could have information related to trade secrets, the AP said. Callahan and other Borgata employees are governed by a one-year non-compete agreement they agreed to when working for the gaming property.

Borgata Cannot Go on Fishing Expedition

Judge Navarro further put restrictions in place on Borgata before any forensic exam of the devices. It could not undertake a “fishing expedition” on the second phone, she said. The gaming property also has to release the identity of any customer whose personal information may be stored on the phone before a forensic search takes place.

Both Callahan and Burke had key marketing jobs at Borgata as of earlier this year. Burke was Borgata’s executive director of marketing and Callahan was the vice president of relationship marketing.

Burke and Callahan have proprietary knowledge about how MGM and Borgata cater to high rollers. They likely also are familiar with each VIP player’s gambling preferences, food and beverage habits, and comps provided to them by Borgata.

Borgata filed a lawsuit two months ago in Nevada federal court claiming Ocean Casino hired away several of its marketing executives. The legal action tried to prevent the competing casino from stealing confidential information about VIP customers.

Last month, Navarro issued an order that prevented Callahan and Burke from contacting or soliciting current Borgata customers. Nor could they release any of Borgata’s trade secrets.

Borgata Warns About Economic Damage

Borgata officials were happy with the judge’s recent ruling. “We look forward to continuing our efforts to protect our business,” Debra DeShong, a spokeswoman for MGM Resorts, told the AP.

“We appreciate that the court took into consideration the hundreds of employees at Borgata and the economic damage that could have been done had these individuals been permitted to misappropriate customer information and other trade secrets in violation of their employment agreements and while working for a competing casino.”

In its statement, Ocean Casino said it was “satisfied” with the judge’s decision, noting that it “allows Mr. Callahan to continue his work” in Ocean Casino operations.

As to the decision regarding Ms. Burke, the order prevents her from working within the marketing department. We are currently considering other roles for Ms. Burke on the Ocean team,” the statement added. “Both Bill and Kelly are invaluable executives, and we are looking forward to a bright future with them.”

Borgata dominates the Atlantic City gaming industry among the city’s nine gaming properties. But COVID-19 has put economic pressure on the Atlantic City casinos.

They continued to lay off workers amid the COVID-19 pandemic. The New Jersey Division of Gaming Enforcement (DGE) said as of Sept. 1, the nine casinos employed 22,352 people.

That’s a decline of 21.8 percent compared with August 2019, or 6,233 positions. Borgata was responsible for the majority of the August job losses.