Ifrah Law Secures Major Victory for iGaming Operators as Massachusetts Court Reinforces Arbitration Rights

By: John Mikuta

In a significant victory for iGaming operators, a Massachusetts trial court issued a sweeping decision reinforcing the enforceability of arbitration agreements against third-parties who seek to recover alleged gambling losses under Massachusetts law.[1]  The ruling represents a major win for Ifrah Law’s iGaming clients and underscores Ifrah Law’s ability to navigate novel legal challenges, develop sophisticated strategies, and achieve meaningful results at a time when iGaming companies face increasingly aggressive and creative legal threats.

Massachusetts, along with about 30 other states, has a “Loss Recovery Act” that allows a losing gambling to sue the winner and recover their losses. Like the statutes in several other states, if the gambling loser does not file a lawsuit within three months, a third party may step in and recover three times the amount of the alleged gambling loss from the gambling winner.

This little-used, centuries-old statute originates from the English “Statute of Anne.”  The Massachusetts Loss Recovery Act, and others like it, were designed to protect individual gamblers and their families from financial ruin and supplement enforcement of gambling laws at a time when local law enforcement was limited or nonexistent.[2]

Recently, however, several companies formed for the apparent sole purpose of filing lawsuits under various state loss recovery acts have brought lawsuits against a number of iGaming operators.  These companies typically have no relationship to any so-called gambler who has suffered alleged gambling losses.  Lawsuits by these third-party companies undermine the fundamental purposes of loss recovery acts—they do nothing to protect individual gamblers and their families, while expanded state and local enforcement authority and gradual legalization of certain forms of gambling has rendered their enforcement function unnecessary.

In one such lawsuit, a sweepstakes casino operator represented by Ifrah Law was sued by an entity called Massachusetts Gambling Recovery LLC (“MGR”).  MGR is organized under Delaware law, maintains its business address in Florida, which claims that it was formed to enforce Massachusetts gambling law.  MGR acknowledged that it has no relationship with any “gambler” who suffered alleged “gambling losses,” and, in over a year of litigation, has never identified a single specific “loser.”  Yet MGR asserted it could file suit in a Massachusetts court to extract three times the “losses” incurred by every Massachusetts user of the operator’s platform.

Like nearly all online platforms, the operator’s platform’s terms and conditions contain a binding arbitration agreement. Because the users whose alleged losses undergird MGR’s claim would therefore have been required to arbitrate their claims, the operator asserted that MGR had to arbitrate its claim too.. While MGR did not dispute that the alleged gamblers would have been required to arbitrate their LRA claims, MGR resisted arbitration, arguing that it could not be compelled to arbitrate because it did not sign the agreement.

Ifrah Law’s litigation team—Jeff Ifrah, Kim Conroy, Robert Ward, and John Mikuta—advanced a common-sense position—MGR cannot assert rights arising from users’ gaming activities while simultaneously avoiding the users’ arbitration obligations.  While two prior Massachusetts decisions had found that equitable principles required arbitration of third-party Loss Recovery Act claims, Ifrah Law’s team of litigators went further, raising an additional, independent argument in support of arbitration: MGR was required to arbitrate because its claim was based on, and derivative of, the operator’s users’ claims.

The Court decisively rejected MGR’s attempt to avoid arbitration, concluding that Massachusetts law required MGR to arbitrate its claim.  Moreover, the Court did not merely rely on the reasoning of prior decisions. Rather, as its primary basis for compelling arbitration, the Court adopted the derivative-claim theory advanced by Ifrah Law.  In doing so, the Court delivered a significant result that igaming operators can rely on to stave off opportunistic attempts by third parties to circumvent the arbitration agreements between operators and their customers.

The Court compelled arbitration for three independent reasons.

First, the Court found that MGR’s claim was “effectively derivative of the gamblers’ rights as relate[d] to the enforceability of the arbitration clause” because MGR “assumes the rights of the losing gamblers” and “step[s] into their shoes.”

Although MGR contended that its claim was brought on behalf of the Commonwealth of Massachusetts instead of the losing “gamblers,” the Court rejected this argument. The Court observed that the lawsuit was not brought in the Commonwealth’s name, the Commonwealth did not receive any share of the recovery, the Loss Recovery Act contains no measures to ensure the Commonwealth retains control of the lawsuit, and the Commonwealth is not authorized to bring its own Loss Recovery Act action.

Instead, the Court emphasized that MGR “stands in the shoes of the losing gamblers, not the government, in all respects.” The Court explained that MGR’s claim exists “only to the extent it can establish that an individual gambler suffered losses and could have sued for the same.”

The Court was persuaded by an analogy drawn in Ifrah Law’s briefing—third-party actions under the Loss Recovery Act are comparable to wrongful death claims.  As the Court reasoned, “[j]ust as rights under the wrongful death statute vest upon the decedent’s death and only to the extent the decedent could have brought suit,” MGR’s purported rights “vest only upon the expiration of the gambler’s rights, after three months, and only to the extent the gambler possessed a [Loss Recovery Act] claim and failed to bring suit.”

Ultimately, the Court explained that because a third party like MGR “can only assert a claim to the extent the gambler could have,” MGR “stands in the shoes” of the users.  Thus, the Court determined that MGR was bound to the same arbitration provision to which the operator’s users agreed.

Second, even if the Court were inclined to adopt MGR’s interpretation of the Loss Recovery Act, it concluded that such an interpretation would be preempted by the Federal Arbitration Act (“FAA”).  The Court emphasized that state law cannot invalidate otherwise enforceable arbitration agreements arising under the FAA, even when the plaintiff asserts a state statutory cause of action.  In other words, the Massachusetts legislature could not remove Loss Recovery Act claims from the scope of an FAA-governed arbitration clause “merely by substituting a nonsignatory party for the losing gambler.”  Thus, any reading that allowed MGR to circumvent the arbitration agreement and bring its Loss Recovery Act claim directly in court would be preempted.

Third, the Court recognized that principles of equitable estoppel independently required MGR to arbitrate. The Court reaffirmed two prior Massachusetts decisions that had compelled to arbitration similar Loss Recovery Act claims brought by third parties.

Importantly, in adopting the operators’ equitable estoppel argument, the Court filled a gap left open by prior decision that MGR latched onto. MGR argued that equitable estoppel could not apply because its right of action under the Loss Recovery Act “did not arise contemporaneous with each user’s deposit, wager, or loss of money.” However, the Court found it “reasonable to infer” that MGR sought to recover “losses incurred by users who still hold active accounts” subject to the same terms and conditions. Because MGR did not identify any specific user, the Court could not conclude that MGR was not claiming a right that accrued contemporaneously with a currently existing arbitration agreement.

The Court further observed that ruling differently would allow “binding agreements” to “be circumvented by the dusting of ‘ancient,’ and ‘arguably anachronistic’ statutes rarely invoked until recent years,” substantially undermining the “Commonwealth’s and Federal policy favoring arbitration.”

For Ifrah Law’s clients, the result is significant.  As plaintiffs—and their lawyers—continue to develop novel legal theories that apply historical, anachronistic statutes to modern iGaming platforms, the Massachusetts court’s decision shows that these litigation strategies can be repelled effectively. The result underscores what clients expect from Ifrah Law: sophisticated legal analysis, strategic advocacy, and an unwavering dedication to achieving favorable results in complex, high-stakes disputes.

[1] Mass. Gambling Recovery LLC v. Blazesoft, Ltd., No. 2584CV01502-BLS2 (Mass. Sup. Ct. Oct. 8, 2026).

[2] Robert Ward, Reviving the Statute of Anne: Should Lawyers Mine Centuries-Old Statutes for Profit?, Ifrah on iGaming (June 16, 2025).