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Massachusetts Gambling Recovery LLC must arbitrate its claims against online sweepstakes casino operators, according to Massachusetts Lawyers Weekly. A Suffolk Superior Court judge ruled that the company is bound by the arbitration agreements accepted by players.
Superior Court Judge Debra A. Squires-Lee issued the ruling in the court’s Business Litigation Session. The company brought its suit under the Massachusetts Loss Recovery Act.
The defendants include SCPS LLC, doing business as Zula Casino; Blazesoft Ltd.; and Blazegames, Inc. Also named are PTT, LLC, doing business as High 5 Games, and High 5 Entertainment, LLC.
Why the Players’ Arbitration Agreements Apply
Squires-Lee identified three independent grounds for requiring arbitration: derivative standing, Federal Arbitration Act preemption and equitable estoppel.
The court concluded that the recovery company stands in the shoes of gamblers whose losses underpin its claims. Those players accepted clickwrap terms requiring individual arbitration to use the platforms.
The judge also held that federal law would override a state-law interpretation allowing a nonsignatory to bypass those agreements. Equitable estoppel provided a third basis for compelling arbitration.
The plaintiff argued that its claim was a qui tam action brought on the commonwealth’s behalf. The judge rejected that argument and the company’s reliance on the 1884 Supreme Judicial Court decision Cole v. Applebury.
Zula’s terms highlighted arbitration in bold capital letters and gave users 30 days to opt out. They also called for arbitration in Canada.
The parties agreed that the Federal Arbitration Act governs. Claims against the Zula entity also fall under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
An Old Recovery Law Meets Sweepstakes Litigation
Massachusetts first enacted the 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.
Massachusetts Gambling Recovery LLC is a Delaware company with a business address in Tampa, Florida. Its case comes amid a national wave of similar litigation-funded LLC suits against sweepstakes casinos and prediction markets, Massachusetts Lawyers Weekly reported.
The case is stayed. The defendants’ pending motions to dismiss will not be heard while arbitration is addressed.
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Source: As reported by Massachusetts Lawyers Weekly.
