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Addicted gamblers in South Carolina recently settled a 6-year-old lawsuit against one of the the largest operators of video poker machines. Lawyers said they expect more litigation against the gambling industry as a whole, but with a different strategy. Class actions filed under the federal Racketeer Influenced and Corrupt Organizations Act (RICO)-as in the South Carolina case-have petered out. The 5th and 9th U.S. circuit courts of appeals have rejected RICO class actions by gamblers. But single-plaintiff RICO suits may be the next wave. A case filed by an addictive gambler against an Indiana riverboat casino is to be tried next month. The confidential settlement in South Carolina brings an end to a lawsuit that began in 1996 and originally named nearly 50 defendants who operated video poker machines before the games were outlawed by the South Carolina Supreme Court on July 1, 2000. [NLJ, 1-21-02]. The case began as a class action but was denied certification by the U.S. district court of South Carolina. All the defendants except the largest operator, Fred Collins, had settled before trial. The first trial against Collins ended in a mistrial in June, after the jury deadlocked, and a new trial began on Sept. 2. Drutis v. Collins Holding Corp., No. 3:97-2136-17 (D.S.C.). Ending the ‘madness’ Collins’ lawyer, Theodore “Tod” Sawicki of Atlanta’s Alston & Bird, said there was a good chance of another mistrial, so the settlement made economic sense. “Comparing the modest claims of recovery with the cost of litigation, it made most economic sense to end the madness,” Sawicki said. The action was brought on behalf of seven named plaintiffs who alleged that operators of video poker machines had unlawfully exploited their gambling addiction and paid out winnings beyond the legal limit of $125 a day. Their lawyer, Carl L. Solomon of Columbia, S.C.’s Gergel, Nickles & Solomon, did not return calls. The plaintiffs testified that they played the video poker machines at pool halls, bars and bowling alleys. One testified that she occasionally deposited a few hundred dollars into one of Collins’ machines, but she never would have if she thought she could only win back $125. The claims were brought in federal court under civil RICO laws and also alleged unfair trade practices. According to their testimony, the plaintiffs’ losses totaled $24,000. If their suit had been successful, that amount would have been trebled under RICO. At its peak, the Collins Entertainment Co. had operated one-sixth of the state’s licensed machines, which generated $3 billion in revenue since their arrival in the early 1980s. Other states, like nearby Georgia, have banned the games, but Collins still operates machines in North Carolina and Montana. According to Sawicki, claims against the industry invoking federal RICO laws are reaching a dead end. “The federal courts do not want to become the People’s Court for gamblers,” Sawicki asserted. Two recent cases out of California and Louisiana have established that federal RICO laws do not allow class actions by gamblers to recoup their losses, he said. In In re Mastercard Int’l Inc., No. 01-30389 (E.D. La.), the 5th Circuit upheld the dismissal of a class action brought by Louisiana gamblers who sued credit card companies alleging that their association with Internet casinos amounted to racketeering in violation of RICO. The 9th Circuit also upheld the dismissal of a class action brought by baseball trading card collectors who sued California distributors, claiming that the random insertion of rare or “chance” cards in the packets amounted to gambling and violated RICO. Chaset v. Fleer/Skybox International, No. 00-56251 (S.D. Calif.). Both circuits said that the plaintiffs had been unable to show that the defendant’s alleged illegal activity was the proximate cause of their injury, as is necessary to state a RICO claim. The South Carolina district court also said that each plaintiff should have to prove proximate cause and his own damages when it denied class certification, said the lawyers involved in the Collins case. The court decided that the unique details of each individual gambler’s story overwhelmed their common treatment as a class. The issue was never appealed. Eyes on Indiana While class actions have so far failed, oral arguments are set to begin next month in a single-plaintiff case in Indiana that is seen as a precursor of things to come by those following gambling litigation. The case, Williams v. Indiana Gaming Corp., No. EV 01-75-C-T/H (S.D. Ind.), is scheduled for Oct. 22 before the 7th Circuit in Chicago. The plaintiff, David Williams, gambled at the Casino Aztar riverboat in Evansville, Ind., for four years, losing $175,000 before he was banned for being a compulsive gambler. He sued the casino, claiming that it was aware of his addiction because it had issued him a “fun card” that indicated his out-of-control gambling habit, but it still targeted him with promotional offers. In addition to RICO, Williams’ suit relies heavily on state racketeering and negligence laws, said his attorney, Douglas Briody of Noffsinger Barnett in Evansville, Ind. They sued in federal court, however, because the actions move faster and allow broader discovery. The suit is just “scratching the surface” of gambling litigation, said Briody. He predicts future claims will invoke a similar mix of state and federal laws. McAree’s e-mail address is [email protected].

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