## Facts

- Credit-card holders used MasterCard and Visa cards to purchase online casino “chips” (credits) and gambled at Internet casino websites.
- One plaintiff incurred $1,510 in chip purchases and lost the amount; another incurred $16,445 in chip purchases and alleged substantial losses, with billing records reflecting casino charges.
- Plaintiffs sued MasterCard, Visa, and issuing banks in putative class actions, alleging they and Internet casinos operated a “worldwide gambling enterprise” using card networks to facilitate illegal Internet gambling.
- Plaintiffs sought treble damages under the Racketeer Influenced and Corrupt Organizations Act (RICO) and declaratory relief that the gambling-related card debts were unenforceable due to illegality.
- The complaints alleged RICO predicate acts including federal Wire Act violations, mail and wire fraud, and state-law gambling offenses.
- The district court dismissed under Rule 12(b)(6) for failure to plead a pattern of racketeering activity or RICO “collection of an unlawful debt,” and plaintiffs appealed.

## Issues

1. Whether the complaints plausibly alleged RICO predicate acts based on Wire Act violations, mail/wire fraud, or state-law gambling offenses arising from processing Internet casino credit-card transactions.
2. Whether plaintiffs plausibly alleged “collection of an unlawful debt” under RICO based on credit-card balances incurred from online casino gambling.
3. Whether the pleaded facts stated any civil RICO claim sufficient to survive a Rule 12(b)(6) motion to dismiss.

## Decision

- The Fifth Circuit affirmed the Rule 12(b)(6) dismissal after de novo review.
- The court held plaintiffs failed to plead viable RICO predicate acts.
- The court accepted that the Wire Act reaches only sports betting; because plaintiffs alleged nonsports casino gambling, they failed to plead Wire Act violations.
- The court held allegations about routine processing and billing of voluntary gambling-related transactions did not plead mail or wire fraud or state-law gambling predicates.
- Without adequately pleaded predicate acts, plaintiffs failed to plead a RICO pattern and failed to plead a cognizable enterprise distinct from ordinary business relationships.
- The court held attempts to collect the credit-card balances did not constitute collection of an “unlawful debt” under RICO.

## Legal Principles

- On a Rule 12(b)(6) motion, a civil RICO complaint must plausibly plead (1) a RICO enterprise, (2) a pattern of racketeering activity supported by qualifying predicate acts, and (3) injury “by reason of” the RICO violation.
- The Wire Act, 18 U.S.C. § 1084, was construed to prohibit only internet sports gambling; nonsports casino-style internet gambling did not, on the pleadings, supply a Wire Act predicate.
- Mail and wire fraud predicates require a pleaded scheme to defraud; facilitating payment processing, without adequately alleged deceptive misrepresentations or fraud directed at plaintiffs, is insufficient.
- “Collection of an unlawful debt” under RICO requires a debt incurred in connection with illegal gambling and falling within RICO’s statutory definition; ordinary credit-card obligations to issuing banks for voluntary transactions were not treated as RICO unlawful gambling debts on these allegations.

## Conclusion

The Fifth Circuit affirmed dismissal of consolidated civil RICO suits seeking to recast voluntary online casino losses and resulting credit-card balances as racketeering injury, holding that the pleaded conduct did not establish RICO predicate acts or collection of an unlawful debt, and that the Wire Act theory failed because it was limited to sports betting.


In re MasterCard Int’l Inc. Internet Gambling Litig., 313 F.3d 257 (5th Cir. 2002)