Sporting Justice in the Fifth Circuit
Charles Carreon
The Fifth Circuit Court of Appeals watches over the federal courts in Louisiana, where Larry Thompson was the lead plaintiff in an aborted class action against MasterCard International, Inc., Fleet Bank and Fleet Credit Card Services. Thompson claimed that the credit card issuers were violating the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by attempting to collect an unlawful debt. This argument cut no ice with the trial judge, who dismissed the case. On November 20, 2002, the U.S. Court of Appeals for the Fifth Circuit upheld the trial judge's dismissal, knocking off one legal argument after another in a relatively short opinion that leaves the reader with one impression — the Fifth Circuit hates welchers.
The Wire Act, the opinion holds, does not make Internet casino gambling illegal, and the plaintiffs didn't claim damage from what the act does make illegal — online sports betting. The court said simply, “because the Wire Act does not prohibit non-sports Internet gambling, any debts incurred in connection with such gambling are not illegal.” Showing that timing is everything, the Fifth Circuit declared the credit card issuers innocent of violating a Kansas law that criminalizes commercial gambling activity “because the defendants completed their transaction with the plaintiffs before any gambling occurred ....” A New Hampshire statute that prohibits operating or controlling “places where gambling occurs,” the court found, was “patently inapplicable to the defendants under the facts alleged.” Someday, this cavalier decision will become one of the cultural oddities of the law, a curious piece of judicial sleight-of-hand that briefly put new teeth in the Roman commercial maxim, “Caveat Emptor,” meaning “let the buyer beware.”
So the lesson here is, if you're saddled with Internet gambling debts, you've got a lot of leverage in California, and none in Louisiana. And if you are a credit card issuer, I'd work hard on blocking wagers originating from California, but not worry about policing New Orleans. That's not where your losses are going to come from.
The Fifth Circuit Court of Appeals watches over the federal courts in Louisiana, where Larry Thompson was the lead plaintiff in an aborted class action against MasterCard International, Inc., Fleet Bank and Fleet Credit Card Services. Thompson claimed that the credit card issuers were violating the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by attempting to collect an unlawful debt. This argument cut no ice with the trial judge, who dismissed the case. On November 20, 2002, the U.S. Court of Appeals for the Fifth Circuit upheld the trial judge's dismissal, knocking off one legal argument after another in a relatively short opinion that leaves the reader with one impression — the Fifth Circuit hates welchers.
The Wire Act, the opinion holds, does not make Internet casino gambling illegal, and the plaintiffs didn't claim damage from what the act does make illegal — online sports betting. The court said simply, “because the Wire Act does not prohibit non-sports Internet gambling, any debts incurred in connection with such gambling are not illegal.” Showing that timing is everything, the Fifth Circuit declared the credit card issuers innocent of violating a Kansas law that criminalizes commercial gambling activity “because the defendants completed their transaction with the plaintiffs before any gambling occurred ....” A New Hampshire statute that prohibits operating or controlling “places where gambling occurs,” the court found, was “patently inapplicable to the defendants under the facts alleged.” Someday, this cavalier decision will become one of the cultural oddities of the law, a curious piece of judicial sleight-of-hand that briefly put new teeth in the Roman commercial maxim, “Caveat Emptor,” meaning “let the buyer beware.”
So the lesson here is, if you're saddled with Internet gambling debts, you've got a lot of leverage in California, and none in Louisiana. And if you are a credit card issuer, I'd work hard on blocking wagers originating from California, but not worry about policing New Orleans. That's not where your losses are going to come from.