The Michigan Supreme Court has granted leave to appeal in a woman’s suit against a casino’s online betting website after it refused to pay her more than $3 million in winnings.
Last year, a split Michigan Court of Appeals panel ruled in Davis v. BetMGM LLC ( MiLW 07-107233 ) that the woman’s claims of fraud, conversion and breach of contract against MGM’s online gaming website that zeroed out her account balance were preempted by the Lawful Internet Gaming Act , or LIGA.
“Although plaintiff argues that the letter she received from the [Michigan Gaming Control Board] indicated that the MGCB lacked the authority to resolve her dispute, it is clear that the MGCB had the power under LIGA to investigate disputes such as plaintiff’s, to determine whether a violation of LIGA or the rules promulgated under it had occurred, and to require corrective actions from an internet gaming provider,” Judge Mark T. Boonstra explained. “The fact that the MGCB did not or will not take action in plaintiff’s favor in this particular case does not alter our preemption analysis.”
Judge Kathleen A. Feeney said in her dissent that the majority’s decision left Davis without a forum to pursue a remedy.
“I conclude that while licensing issues, including administrative disciplinary actions against a licensee, come within the Gaming Board’s exclusive jurisdiction, disputes by a patron seeking a remedy in tort or contract do not come within the Gaming Board’s jurisdiction,” she wrote. “[B]y denying plaintiff a forum by which to pursue her claim of unpaid winnings, the majority’s decision lends a new meaning to the old gambling adage that the House always wins.”
Now, the justices have directed the parties to address whether each of Davis’ common law claims is inconsistent with and preempted by LIGA, such that the trial court lacked subject matter jurisdiction; and if the MGCB has jurisdiction exclusive or otherwise over common law claims regarding contract or account disputes and, if so, what statutes or administrative rules govern its resolution of the dispute.
Persons or groups interested in the determination of the issues presented here may move the court for permission to file briefs amicus curiae.
Gaming app
BetMGM is an online casino gaming website. The Delaware corporation is licensed to conduct business in Michigan.
Jacqueline Davis won a significant amount of money playing the “Luck O’ the Roulette” game on BetMGM’s app in March 2021. Just two days later, Davis went to the MGM Grand Casino in Detroit to withdraw $100,000 of her winnings from the withdrawal window. Soon after her withdrawal, though, her account was flagged by BetMGM for unusual activity and suspended.
That left Davis unable to play or access the remaining balance of her online account roughly $3.2 million.
After investigating, BetMGM concluded that, due to an error in the game, Davis’s account had mistakenly been credited. Her account was then “zeroed out.”
In April 2021, Davis’s attorney contacted BetMGM, asking that the funds be released. BetMGM said Davis hadn’t actually won that amount; the account balance had been the result of a malfunction in the gaming platform and she wasn’t entitled to the remaining balance.
Davis filed suit in the Wayne County Circuit Court in June 2021 against BetMGM for fraud, conversion and breach of contract.
The following month, she filed a patron dispute with the Michigan Gaming Control Board, or MGCB. BetMGM filed a motion for summary disposition under MCR 2.116(C)(4). It argued that LIGA preempted Davis’s claims, the MGCB had primary jurisdiction over the claims and Davis hadn’t exhausted her administrative remedies.
In a February 2022 letter, the MCGB deputy director told Davis in part that “MGCB investigations are not intended to determine the merits of any outstanding dispute or litigation between an authorized participant and the internet gaming operator and its internet gaming platform provider. Rather, the MGCB’s powers include supervising internet gaming operations, investigating alleged violations of the Act and Rules, and upon the finding of a violation of the Act or Rules, the Board may direct a licensee to take any corrective action the board considers appropriate.”
After hearing oral arguments, the trial court granted BetMGM’s motion for summary disposition on the ground that Davis’s claims were preempted by LIGA.
In her motion for reconsideration, Davis included a partially redacted letter from the MGCB to BetMGM’s CEO, which had been produced in response to a Freedom of Information Act request. Per the opinion, the letter indicated that Bet MGM failed to comply with the MGCB’s rules requiring BetMGM to immediately notify the MGCB of a malfunctioning game, to advise Davis of her right to submit a complaint to the MGCB and to timely provide specific information to the MGCB when requested. However, the letter concluded that “The Board has decided not to pursue formal disciplinary action at this time. Please be advised that any further violation of the Lawful Internet Gaming Act or Michigan Internet Gaming Rules may result in formal disciplinary action.”
The trial court denied Davis’s motion for reconsideration and Davis appealed.
LIGA
LIGA’s purpose is to “protect residents of this state who wager on games of chance or skill through the internet and to capture revenues generated from internet gaming” through regulation “by establishing a secure, responsible, fair, and legal system of internet gaming.”
LIGA says the MGCB has jurisdiction over those licensed by the board and may take enforcement action against those who aren’t licensed by the board.
“As the parties have noted, there is a dearth of caselaw interpreting LIGA, which was enacted in 2019,” Boonstra said, adding that cases interpreting the Michigan Gaming Control and Revenue Act , or MGCRA are instructive.
“In Kraft [ v. Detroit Entertainment, LLC ] , this Court concluded that MGCRA was intended to preclude inconsistent common-law actions based on the provision that stated ‘[a]ny other law that is inconsistent with this act does not apply to casino gaming as provided for by this act,’” he wrote. “The same conclusion is warranted here in light of the LIGA’s corresponding provision that “[a] law that is inconsistent with this act does not apply to internet gaming as provided for this act.”
Boonstra rejected Davis’s statutory language arguments, saying not every variation needs a different interpretation.
“Although plaintiff argues that the Legislature’s use of the word ‘other’ in MGCRA (and not in LIGA) indicates that it intended MGCRA to sweep more broadly, we see no functional difference between the two phrases the phrase ‘any other’ and the indefinite article ‘a’ both imply a broad generality,” he explained. “We therefore hold that the Legislature intended that LIGA preempt inconsistent common-law claims.
In the end, Boonstra said Davis’s common-law claims for fraud, conversion and breach of contract are inconsistent with LIGA.
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