Plaintiff lawyers and their working class, uneducated clients are proof positive of the axiom, "When it comes to money, people can rationalize just about anything."
What about all those ATM's one sees in the brick and mortar casinos? Is this debt also invalid?
Pay particular attention to the last paragraph of the article.
<<Online gamblers sue their creditors
Credit card firms say it's a long shot
By Pamela Coyle
Staff writer/The Times-Picayune
From an Alabama man whose dabbling with blackjack cost him $49.95 to a North Carolina man who is $50,000 in the hole, Internet gamblers nationwide are going to court to try to dump their debts.
These players, who used their credit cards to pay for gambling at "virtual casinos," cite long-standing laws that view gambling debts as unenforceable. They say they should not have to repay the banks and credit card companies that extended them credit to gamble, and federal lawsuits against the industry's giants have multiplied as business at the Parisian Online Casino and similar Web sites has flourished.
It is a nervy play, and whether it will be a long shot or a winner is now in the hands of a federal judge in New Orleans.
The federal panel that coordinates complex litigation opted against sending the cases to New York, the home of MasterCard International Inc., or San Francisco, where VISA International is based, and instead dealt them to a courtroom between the two defendants' headquarters. All the cases have been consolidated before U.S. District Judge Stanwood Duval Jr.
The gamblers say the credit card companies should not only forgive their debts, but refund payments already made as well. The cases, all proposed as class actions, ultimately could involve thousands of Internet gamblers and untold millions in debt -- if they survive some formidable legal hurdles.
*** Foolproof wager ***
"We firmly believe both morally and legally that Internet gambling is something that should be stopped to the extent it can be stopped," said W. Lewis Garrison Jr., a Birmingham lawyer who represents the gamblers. "Credit cards are essentially the lifeblood of this enterprise. If you cut off the supply to the money, we believe the Internet gambling industry will essentially wither and die."
Garrison and Minneapolis lawyer Barry Reed have filed more than a dozen federal lawsuits against credit card companies. They say the issue is simple: Most states consider gambling debts legally void, either under a specific statute or as contrary to public policy, throwing into question whether credit card companies should be able to collect on them.
Some courts, including an Illinois appeals court, already have held that a cash advance used to gamble was a simple contract that had nothing to do with gambling. But the Internet puts a slightly different twist on the issue.
The lawsuits accuse the firms of running afoul of federal wire laws by extending credit to gamblers via the Internet and breaking racketeering laws by conspiring with Internet casinos headquartered overseas and out of regulators' reach.
*** Pushing their luck ***
Attorneys for credit card companies say the gamblers miss the mark. Online gamblers buy chips and must pay for them whether they win, lose or walk away without playing, they contend.
"The fundamental mistake is that plaintiffs characterize them as gambling debts when they are credit card debts," said James McCabe, a San Francisco lawyer who represents banks that issue cards. "They are definitely not gambling debts. Gambling debt refers to a debt arising from people who are participants in a game of chance. There is no allegation VISA or MasterCard are playing blackjack with the plaintiffs.
"Even though someone may have repeatedly and voluntarily authorized the transactions, they want to get out of paying it," McCabe said.
*** Untouchable ***
In some countries, including Australia, Internet gambling is legal and regulated. Louisiana is one of only four states that have outlawed it, though no one has been prosecuted since the law was passed in 1997. Congress is considering a ban. But for now, online casinos are thriving in a regulatory black hole.
In the privacy of their homes or offices, patrons click onto hundreds of gambling Web sites. Last year they spent more than $1 billion. Typically, online casinos are "based" overseas, in countries such as Antigua or Grenada, where entrepreneurs open merchant accounts with an island bank and set up casinos on the Web. The casinos or another company then sell "chips" for everything from bingo to baccarat to blackjack.
"It is just growing exponentially," said Garrison, adding that many college students are getting hooked. The lawsuits want credit card issuers out of the business. Period.
They contend that Internet gambling violates a 1961 federal law that bans interstate sports betting over phone lines, though some lawyers say it isn't clear if the Wire Act can be extended to cover blackjack and other casino games on the Internet. The racketeering claim already has been dismissed by a federal judge in a similar Wisconsin case, and the cases now in New Orleans could meet the same fate.
*** Element of risk ***
To succeed with racketeering claims, the plaintiff gamblers will have to prove there were criminal violations and "that is very difficult," said I. Nelson Rose, a gambling law expert at Whittier Law School in California.
Typically, under state contract law, gambling debts are uncollectible but don't require creditors to disgorge money they've already been paid.
"What that means is the courts will leave the parties as they find them. If they have paid the bill, they don't get the money back. If they haven't paid, the casino doesn't get the money," he said.
A few gamblers who have pursued cases in state courts have fared well. A California woman was sued by credit card companies for defaulting on at least $70,000 in debts from blackjack, craps and other online games. She countersued and had her debts wiped out -- and hefty legal bills paid -- after a dozen credit card issuers reached a settlement with her last fall. A lawsuit by another California gambler is pending.
Those lawsuits prompted some changes. MasterCard now requires online gambling sites that accept its cards to warn customers that the activity may be illegal in some states and to keep a record of gamblers' locations. And at least one major VISA issuer, Providian Bank, has stopped processing Internet gambling transactions.
The director of litigation for VISA International said whether to process gambling charges is up to its 21,000 member banks.
"We are not a law enforcement organization," lawyer Steve Zelinger said. "We are not out there to police these activities. We had a program in place to identify Internet gambling transactions so issuers could exercise their discretion for business risk and legal risk.
"The law is all over the place on whether these kinds of transactions are legal or illegal," said Zelinger, who called the lawsuits "irritants" and accused the gamblers' attorneys of abusing the legal system by filing lawsuits all over the country in the hopes of finding a sympathetic judge.
*** Here to stay ***
It makes sense to consolidate the cases in one place, he said. The panel put the cases against VISA in one group and MasterCard in another and originally assigned all of them to U.S. District Judge Morey Sear. But Sear recused himself, saying he owns stock in BankOne, a defendant in some of the cases, and wanted to avoid the appearance of a conflict of interest. The panel reassigned the cases to Duval.
Even if credit card companies tighten up, some observers say, online gambling is here to stay. Patrons simply will use e-cash and online casinos will find a new way to process transactions, said Joseph Kelly, a business law professor and co-editor of the Gaming Law Review.
"The bottom line is you can't stop it unless you want to send federal troops to invade Sydney Harbor," Kelly said. "If I really thought you could stop Internet gambling without invading foreign countries, I'd say so.">>
|
