     Kristi Feathers (Kfeath) | Wednesday, March 22, 2000 - 04:24 pm 
Plaintiffs say that laws ban collection via credit cards.
David E. Rovella
The National Law Journal
Despite pending congressional legislation that would ban Internet gambling, plaintiffs' lawyers have launched a series of federal class actions aimed at holding the high rollers of the credit card industry responsible for the online gambling losses of consumers.
Filed in Alabama and Wisconsin, the complaints accuse major credit card companies and banks of flagrantly violating state and federal laws by collecting debts incurred as a result of illegal Internet gambling. Plaintiffs' lawyers say the six years' worth of gambling debts they are seeking, constrained only by the statute of limitations, could amount to billions of dollars in returned payments, interest and even damages.
THE ALLEGATIONS
One of the complaints alleges that Internet casinos, credit card companies and banks joined to form an illegal enterprise to facilitate illegal gambling and to collect gambling debts incurred by cardholders who place bets. Maple v. Capital One Bank, No. 99-0665.
Filed on March 19 in U.S. District Court for the Northern District of Alabama, the action alleges violations of the Racketeer Influenced and Corrupt Organizations Act.
Name plaintiff David T. Maple, of Birmingham, Ala., visited the Web site of the Parisian Online Casino on Feb. 8, 1999. After disclosing his Capital One MasterCard number, which enabled him to play blackjack online, he promptly lost $49.95.
Compared with many, his losses were minimal; some consumers have lost tens of thousands of dollars.
NET GAMBLING DOUBLED
According to a recent government study, the Internet gambling industry doubled in size between 1997 and 1998, with as many as 15 million people gambling, and losing, close to $1 billion.
The credit card companies profit through the association fee they charge site owners who accept MasterCard as a form of payment.
PLASTIC FEVER
"Ninety percent of all gambling on the Internet is accomplished through the use of credit cards," said W. Lewis Garrison Jr., of Birmingham's Garrison and Sumrall P.C. who, along with Barry G. Reed, of Minneapolis' Zimmerman Reed P.L.L.P., is leading the charge against the credit card companies.
"The credit cards and banking industry are the blood supply to this business," Mr. Garrison said. "If we cut it off, the problem will wither and die."
Mr. Garrison said that the defendants are violating several federal laws, including the Wire Communications Act of 1961, which bars the use of wire communication facilities for interstate or foreign gambling purposes, something Mr. Garrison believes to include the Internet. But it is the state law cited in his amended complaint in the Maple suit, filed on July 1, that Mr. Garrison says has the best chance of not only eliminating the outstanding debts of the class plaintiffs, but getting some of their losses back.
Mr. Garrison said that most states have laws similar to Alabama's Sec. 8-1-150(a), Ala. Code (1975), which bars the collection of illegal gambling debts.
In their motion to dismiss, Capital One Bank said that Mr. Maple's lawyers are misapplying RICO and that they have failed to name indispensable parties or predicate acts required by the law.
"Aside from providing him with a credit card," the motion said, "these defendants did nothing more than process a charge...that Maple himself specifically authorized."
DEFENDANTS' ANSWER
The defendants contend that existing federal laws, when passed, did not conceive of the Internet, and that state laws should not be allowed to govern such a widespread medium. But some experts disagree.
"Merely because a law was enacted before the Internet was developed doesn't mean that those laws are not applicable," said Christopher Wolf, a technology law expert in the Washington, D.C., office of Proskauer Rose L.L.P.
"The issue that is going to be raised by these [class action] cases is whether or not credit cards should be in a position to police the Internet," he said.
In Washington, the U.S. Senate is near to approving the Internet Gambling Prohibition Act of 1999, which is authored by Senator Jon Kyl, R-Ariz., and would bar use of the Internet or interactive computer services for gambling or the transmission of information to assist in a gambling enterprise.
POSSIBLE PENALTIES
Violators could be fined up to $20,000, and sentenced to as much as four years in prison. The law would exempt state lotteries and horse racing. But Internet service providers allege that the new law would put much of the policing responsibility on their shoulders.
The law would not punish service providers as long as they complied with orders to disable the accounts of any offending sites.
A three-year-long study by the National Gambling Impact Study Commission concluded that 28.8 million Americans are involved or at risk of being involved in pathological or problem gambling.
FOUR-STATE BAN
Four states-Illinois, Louisiana, Nevada and Texas-already specifically ban Internet gambling, and the U.S. Department of Justice has brought charges against 22 Internet gambling concerns under the Wire Communications Act in recent years.
The report recommends stiff federal laws against Internet gambling. |
| Anonymous | Thursday, March 23, 2000 - 06:57 am
Interesting points: 1) An Illegal debt is not enforcable (if you pay an "escort service" (prostitute), bookmaker, drug dealer, etc. with a bad check, he/she cannot file criminal charges against you (they might try, but the DA will not prosecute when he discovers it was an illegal debt). The Credit Card companies will probably lose this one.
Point 2) One by one, most credit card issuers are now stating in cardmember agreements that they will not authorize charges on internet gambling related charges
Point 3) One by one, most credit card issuers are now stating in cardmember agreements that you cannot sue them, but must use binding arbitration. |
| Anonymous | Thursday, March 23, 2000 - 08:44 am
Sean:
I went to the bar, ordered many drinks, got drunk, drove my car, hit an old lady and killed her. Maybe I should sue Anchor Hocking for making the drinking glass that I used for my whiskey, eh? Or maybe Kwikset corporation for making the door handle that allowed me to get into the bar?
Ridiculous concept - making the credit card companies liable for the debts of idiots because they decided to try out internet gambling. Next thing you know, they'll be suing Satan, claiming that the 'devil made me do it'.
Anyone ignorant enough to give their credit card information to an internet gambling site should be put on some serious medication following psychological counseling. |
