South-Western Legal Studies in Business

Gamblers Who Lose Money by Gambling Online May Not Sue Credit Card Companies
Description Appeals court upheld the dismissal of a class action suit that gamblers brought against MasterCard and Visa for allowing them to charge Internet gambling debts to their credit cards. The card companies did nothing illegal, so the gamblers are not victims who may sue to try to erase their debts.
Topic Consumer Protection
Key Words Online Gambling; Credit Card Debt; RICO
C A S E   S U M M A R Y
Facts Thompson and others gambled online. Using a casino website, they deposited money into a gambling account by charging a sum of money to their credit card. Winnings and losses would be credited or charged to that account. After running up losses, the plaintiffs filed a class action suit against MasterCard, Visa, and the issuing banks. The plaintiffs did not deny their debts, but contended that they should not have to pay them because the credit card companies were engaged in an illegal global gambling enterprise that violated RICO (the Racketeer Influenced and Corrupt Organizations Act). The district court dismissed the suit; plaintiffs appealed.

Affirmed. The credit card holders failed to sufficiently allege that the card companies engaged in the collection of unlawful debt, absent any showing that the debt was unlawful because it was incurred or contracted in an illegal gambling activity, or in connection with the illegal business of gambling, or because it was unenforceable under usury laws, or was incurred in connection with the business of lending at usurious rates. That is, there was no crime that would trigger the application of RICO. Federal law does not prohibit non-sports Internet gambling, so any debts incurred in connection with such gambling are not illegal. The gamblers “are not victims.”

Citation In re: MasterCard International, 313 F.3d 257 (5th Cir., 2002)

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