Good Trivia Gone Bad

Susanne Uebler of Long Island New York won $1 million six years ago in a trivia contest at the online gambling site Oriental Casino, but after collecting a very small potion of her prize, she was cut off when the casino went out of business. Now she is battling in the courts for the prize she was promised, and early rulings have given her some hope. For the I-gaming industry, the case rekindles a long-running debate: To what extent are software suppliers responsible for the actions of their licensees?

"Until the business models of Internet gaming and the success of self-regulation and the marketplace in ensuring fair play are better understood by the public, the government or political bodies, we do not anticipate getting more favorable rulings on the jurisdictional issues in the U.S."

- William Gantz

The prize was won in July 2000, and the casino's operator, Boss Media licensee CyberCroupier Sweden AB, arranged to pay Uebler monthly payments of $3,333.33 for a period of 25 years, beginning March 2001, through New York-based online payment solutions provider WebDollar, a Boss Media subsidiary. But CyberCroupier folded in 2003, at which time Uebler had received only $77,000. She was notified that no further payments would be coming and that her account with Oriental Casino was being closed.

Uebler filed suit against CyberCroupier in September 2003. The defunct company failed to respond, and she amended the complaint in June 2004 to name Boss Media as a defendant. Boss filed for a dismissal on Aug 11, 2004, based on lack of personal jurisdiction because Boss is located outside of New York. The court denied Boss's motion to dismiss on March 29, 2005. A second motion was filed on Sept. 30, 2005 and denied on May 30, 2006.

Boss Media contends that CyberCroupier was solely responsible for running the contest and paying Uebler the prize money.

"The software which Boss Media AB licensed had nothing to do with the trivia contest run by the Oriental Casino," said Boss's lead counsel, William Gantz of DLA Piper Rudnick Gray Cary U.S. LLP. "Boss Media AB's software product was for casino games only. The alleged sweepstakes that forms the basis of Ms. Uebler's complaint did not utilize Boss Media AB software in any way."

But Eastern District Federal Judge Arthur D. Spatt noted in his ruling of May 30 that CyberCroupier's use of WebDollar, a New York-based company and subsidiary of Boss Media, was enough to grant long-arm jurisdiction, which is a statutory grant of jurisdiction to local courts over foreign defendants.

Gantz, meanwhile, argues that no part of Spatt's ruling was based on testimony.

"The opinion appears to be based upon a factual assumption that absent the existence of Boss Media AB's subsidiary, WebDollar, to perform payment processing, Boss Media AB would have entered the market and performed these activities itself," Gantz said. "CyberCroupier contracted separately with WebDollar AB for payment processing services."

From an industry standpoint, Gantz feels the decision reflects the ongoing erosion of jurisdictional defenses available to Internet-based businesses in general.

"The courts have similarly denied jurisdictional motions brought by software manufacturers if licensees that accept play from the United States, notwithstanding that the manufacturer has no contacts or business presence in the United States," he said. "Operators with Web sites that have interactive features and obtain information or orders from a customer are subject to jurisdiction wherever the customers are. Until the business models of Internet gaming and the success of self-regulation and the marketplace in ensuring fair play are better understood by the public, the government or political bodies, we do not anticipate getting more favorable rulings on the jurisdictional issues in the U.S."

Gantz likened Uebler's case to someone buying graphic arts software for their business, but then failing to meet their client's expectations.

"If the client hates what they've made and the person ultimately loses their business, they can't sue the software maker," he said.