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State of Play’s TL;DR
- Superior Court Judge Debra A. Squires-Lee ruled that Massachusetts Gambling Recovery LLC must arbitrate its Loss Recovery Act claim against sweepstakes casino operators.
- Massachusetts’ Loss Recovery Act allows another person to seek triple a gambler’s losses after the gambler’s three-month window to sue expires.
- The Suffolk Superior Court case is stayed while arbitration is addressed.
A Massachusetts judge has ruled that a company seeking to recover gamblers’ losses from online sweepstakes casino operators must follow the arbitration agreements those players accepted, according to Massachusetts Lawyers Weekly.
Superior Court Judge Debra A. Squires-Lee, sitting in Suffolk Superior Court’s Business Litigation Session, ruled against Massachusetts Gambling Recovery LLC on three independent grounds. The decision comes amid a national wave of similar lawsuits by litigation-funded LLCs against sweepstakes casinos and prediction markets.
Why the player agreements apply to the LLC
Massachusetts Gambling Recovery LLC is a Delaware company with a business address in Tampa, Florida. It sued SCPS LLC, doing business as Zula Casino; Blazesoft Ltd.; Blazegames, Inc.; PTT, LLC, doing business as High 5 Games; and High 5 Entertainment, LLC.
The operators moved to compel arbitration. To use the platforms, players had to accept clickwrap terms requiring individual arbitration. Clickwrap terms are agreements users accept by clicking.
Squires-Lee concluded that the LLC stands in the gamblers’ shoes when pursuing their losses. She also found that federal arbitration law preempts a state-law interpretation, allowing the LLC to avoid those agreements. A third basis was equitable estoppel, which prevents the plaintiff from avoiding the arbitration terms in these circumstances.
“[T]he Legislature may not (intentionally or unintentionally) remove LRA claims from the scope of an FAA-governed arbitration clause merely by substituting a nonsignatory party for the losing gambler,”
Squires-Lee wrote.
Zula’s terms highlighted arbitration in bold capital letters, provided a 30-day opt-out period and called for arbitration in Canada.
An old recovery law meets online casino terms
Massachusetts first enacted its Loss Recovery Act in 1785, modeling it on England’s 1710 Statute of Queen Anne. The law gives a losing gambler three months to seek recovery of losses from unsanctioned gaming. After that period, another person may sue for three times the amount lost.
The Legislature has since exempted licensed casino gaming and sports wagering from the statute.
The judge rejected the LLC’s reliance on the Massachusetts Supreme Judicial Court’s 1884 decision in Cole v. Applebury. She also rejected its argument that the lawsuit was a qui tam action, meaning one brought on the commonwealth’s behalf.
The case is stayed, and the defendants’ pending motions to dismiss will not be heard while arbitration is addressed.
If you or someone you know has a gambling problem, call 1-800-GAMBLER.
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Source: As reported by Massachusetts Lawyers Weekly.
