VGW Group Secures Dismissal of Ohio Gambling Loss Recovery Action

Online social gaming company VGW Group secured a key victory in the Ohio Court of Common Pleas with the dismissal of a lawsuit brought against it on the theory that their offerings amount to illegal gambling. American Lawyer recognized the win in its Litigators of the Week column.

The decision is significant in its emphatic rejection of the proposition that private plaintiffs, who have suffered no cognizable injury, can nevertheless invoke archaic statutes to bring claims for mass recovery of the alleged gambling losses of individuals whose identities they do not know and with whom they have no relationship.

• The plaintiff, an entity formed for the purpose of bringing the lawsuit and backed by litigation funders, had asserted claims under Ohio’s gambling loss recovery statute, Section 3763.04 of the Revised Code, which provides that if a person who loses money on unlawful gambling does not timely sue to recover the losses, “any person” can sue to recover the gambler’s losses.
• The Ohio statute is materially identical to statutes in other states, typically dating back more than a century, and all tracing their origins to England’s “Statute of Queen Anne.” The provision permitting “any person” to recover– common to many of these statutes – was intended to protect the spouses or children of gamblers by allowing them to seek financial recompense. However, these statutes have become increasingly popular among the plaintiffs’ bar, looking for ways to recover mass judgments or settlements with no obligations to a class or to those allegedly harmed.
• To that end, here, the plaintiff sought to collect for itself the alleged losses of everyone in the State of Ohio who played VGW’s games. The case was particularly egregious in its use of litigation funding in an effort to realize a financial windfall.
• Granting VGW’s motion to dismiss in full, the Court sided with VGW’s argument that the plaintiff lacked both common law and statutory standing. The court noted that the plaintiff was an uninjured, non-Ohio citizen who suffered no losses but was attempting to reap a windfall profit from the alleged losses of Ohioans with whom it had no relationship.
• The decision is a landmark in interpretation of these types of statutes and may resonate with courts handling similar actions in other states.

The Orrick team is led by Behnam Dayanim and Greg Beaman and includes Mike Rosenberg, Ned Hirschfeld and Harmann Singh.