Real-Money Online Gambling Industry Young, but Could Class Action Lawsuits be Brewing?

Explore:  Class Action Gambling

The return of online poker to the United States in state-regulated environments poses attractive opportunities for operators.  But, at the same time, operators need to look to the experience of brick and mortar casinos to anticipate the potential risk of class action and similar lawsuits.

For example, one gambler recently made headlines by suing a Las Vegas casino after he lost over $500,000 in one night of gambling.  The player claimed that he was too intoxicated to be held responsible for his actions, and that the casino was liable for plying him with drinks and lending him money in his incapacitated state.  It is easy to see how an online player could try to make a similar claim for problem gambling.  A player might assert that he was intoxicated or otherwise incapacitated when he engaged in online play, and that since online gaming lacks the supervision of in-person casinos, there was nobody there to stop him from playing.  This could be even further expanded into more general problem gambling suits, in which players claim that online gambling is so accessible 24/7 from the comfort of their homes or mobile devices that it simply makes it too easy for them to gamble, leading to problems in their finances and personal lives.

Unscrupulous plaintiffs’ lawyers may see the opportunity for a big payday by bringing class action suits against online operators for these problem gambling claims.  Because gaming websites will be serving thousands of players, all subject to the same policies and practices of the online casinos, this is an area that is potentially ripe for class action lawsuits.

Fraud is another area of potential risk.  For example, a class action lawsuit was recently brought against the Atlantic City Borgata after a poker player introduced $800,000 worth of counterfeit chips into a poker tournament at the casino.  A plaintiff purporting to represent the tournament’s 4,000 participants sued the casino on the basis that it should have done more to prevent, stop, and remedy the fraud.

Players could bring similar class action claims in the online gaming context, with potentially larger classes.  For instance, they might allege fraud, collusion, or glitches that affect not just one particular table or tournament, but every single player on the website. Outside of the gaming itself, fraud or errors in online payment processing could affect thousands of players at a time.  While online gaming websites contain sophisticated software to prevent such problems,there is simply no way to eliminate this risk entirely.

Class action lawsuits pose particular litigation risks for operators.  The theory that led to permitting class actions is that they allow for the conservation of resources by bringing common claims together to be considered jointly, and in the event of a meritorious claim, a single lawsuit can provide compensation to all affected plaintiffs.  The downside for the defendant gaming operators is that class action plaintiffs generally do not need to risk anything by bringing claims because class action plaintiffs’ lawyers usually work on contingency fees, collecting a percentage of any successful award.  The result is that there are class action “strike” suits – lawsuits with little or no merit that are brought in anticipation that defendants will settle rather than endure the cost and bad publicity of a long-running lawsuit.

To date, only Nevada, Delaware and New Jersey have passed laws allowing for real-money online gambling, but more states are expected to follow suit.  We can expect that as the industry grows, so too will the number of class actions from players seeking a big payday over questionable claims.  Operators must be prepared for this eventuality, and take preventative actions such as posting warnings and implementing multi-level security measures to head off such claims.


Topics:  Class Action, Gambling

Published In: Art, Entertainment & Sports Updates, Personal Injury Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jeff Ifrah | Attorney Advertising

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