In re MasterCard International Inc. Internet Gambling Litigation

Larry Thompson (plaintiff) used his MasterCard credit card to purchase $1,510 in gambling credits on internet casino websites. Thompson lost all of his money, and his credit-card statement reflected casino purchases of $1,510. Lawrence Bradley (plaintiff) used his Visa credit card to purchase $16,445 in gambling credits on internet casino websites. Bradley lost much of what he wagered, and his credit-card statement reflected casino purchases of $7,048. Thompson and Bradley filed class-action complaints in federal court against MasterCard International, Visa International, and banks that issued MasterCard and Visa cards (collectively, the credit-card companies) (defendants). Thompson and Bradley asserted claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleging that the credit-card companies and various casinos had created a worldwide enterprise to facilitate illegal internet gambling. Thompson and Bradley sought damages and also sought declaratory judgments that their gambling debts were unenforceable due to illegality. The district court dismissed the complaints after concluding that Thompson and Bradley had not sufficiently alleged facts showing that the credit-card companies had engaged in a pattern of racketeering activity (i.e., two or more related predicate acts that demonstrated or threatened continued criminal activity) or collection of unlawful debt, which was a necessary element of a RICO claim. In reaching its conclusion, the court rejected Thompson’s and Bradley’s allegations that the credit-card companies had committed predicate offenses of Wire Act violations, wire fraud, and mail fraud. Among other considerations, the court reasoned that Thompson’s and Bradley’s gambling debts were legal because the Wire Act prohibits only internet sports gambling, and Thompson and Bradley had engaged in nonsports gambling on the casino websites. Thompson and Bradley appealed, asserting additional alleged predicate offenses under Kansas and New Hampshire gambling laws.