Hanosh v. Segal – 5/22/2014

May 30, 2014

Arizona Court of Appeals Division One Holds that Internet Gambling Losses Are Not Injuries Providing a Private Cause of Action Under Arizona’s Racketeering Statute.

Jerry Hannosh claimed to have lost $800,000 betting on sports at an Internet gambling site operated by the Segal family.  Hannosh filed suit to recover his losses under Arizona’s RICO statute, alleging that the Internet gambling operation was a pattern of unlawful activity which caused him injury.  The Segals moved to dismiss for failure to state a claim upon which relief could be granted, arguing that Hannosh had no cognizable injury.  The superior court granted the motion to dismiss.

Hannosh filed a timely notice of appeal, and argued that the superior court had improperly relied upon the federal RICO statute in deciding the motion to dismiss.  Under A.R.S. § 13-2314.04(A), a private right of action exists for someone who “sustains a reasonably foreseeable injury to his person, business or property” from racketeering activity.  The phrase “injury to his person” is not included in the federal statute.

The Court of Appeals affirmed the dismissal.  After examining the legislative history of the Arizona RICO statute and case law examining the phrase “injury to a person” the Court held that the phrase was meant to cover bodily harm or injuries to legally protected personal interests.  Although Hannosh claimed that the Segals made credible threats against him to collect on the gambling debts, he did not allege emotional anguish or any other injury from the threats.  Nor would voluntary gambling constitute an injury to a legally protected interest in the absence of an allegation that the gaming was rigged.  Similarly, because Hannosh received a fair chance to win or lose in the bets he made, merely losing does not constitute an injury to business or property interests.

Judge Portley authored the opinion; Judges Gemmill and Cattani joined.