D Jacqueline Davis v. Betmgm LLC ( 2023 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
JACQUELINE DAVIS, FOR PUBLICATION
September 28, 2023
Plaintiff-Appellant,
v No. 363116
Wayne Circuit Court
BetMGM, LLC, LC No. 21-006981-CK
Defendant-Appellee.
Before: BOONSTRA, P.J., and LETICA and FEENEY, JJ.
FEENEY, J. (dissenting).
Because the majority’s decision leaves plaintiff without a forum in which to pursue a
remedy for her claim, I respectfully dissent.1
Plaintiff is of the belief that defendant owes her over $3 million in winnings from her
wagering activity on defendant’s internet gambling site. When defendant refused to pay all of the
claimed winnings,2 plaintiff filed suit in circuit court, alleging fraud, conversion, and breach of
contract. As discussed in the majority opinion, the trial court dismissed the suit on the basis that
the Lawful Internet Gaming Act (LIGA)3 preempted plaintiff’s claims.
By contrast, the Michigan Gaming Control Board (MGCB) takes the position that it does
not resolve patron disputes. In a January 24, 2022 email from Assistant Attorney General Mark
1
I offer no opinion on the validity of the claims raised by plaintiff nor whether she is entitled to a
remedy. I merely conclude that, under the law, plaintiff is entitled to bring her claims to circuit
court for adjudication of the validity of those claims.
2
Plaintiff did receive $100,000 of her claimed winnings before defendant refused to pay the
remainder, claiming a malfunction in the gaming platform. Again, I form no opinion on whether
there was such a malfunction or even whether, if there were, it would relieve defendant of its
obligation to pay the claimed winnings.
3
MCL 432.301 et seq.
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Sands of the Alcohol and Gambling Enforcement Division to plaintiff’s counsel, AAG Sands
states:
Thank you for speaking with us last month on the Davis v BetMGM matter and for
the documentation you provided for our review. Based on our review of that
information and after discussion with our client agency, the Michigan Gaming
Control Board states as follows:
The Michigan Gaming Control Board is tasked with regulating online gaming in
the State. The patron complaint process exists to inform the Board of potential
violations of the Lawful Internet Gaming Act and Rules by its licensees. Based on
the receipt of such a complaint, the Board may exercise its discretion to investigate.
Upon the receipt of a patron complaint, an investigation, and 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. But what the Board does not do is determine
the validity of a dispute between the authorized participant and the licensee. That
is, the determination that a licensee has or has not violated the Act or Rules is not
an adjudication on the merits of the underlying authorized participant/licensee
dispute because the Board does not have the authority to adjudicate such a dispute.
Clearly the Attorney General’s position, and by extension the position of the MGCB, is that the
MGCB is to enforce the statute and the gaming rules, and that it is not the MGCB’s role to
adjudicate disputes between patrons and casinos. The deputy director of the MGCB’s February
2022 letter, quoted by the majority, further supports this position. The letter informed plaintiff
that “the patron complaint process exists to inform the Board of potential violations of the Lawful
Internet Gaming Act and Rules by its licensees.” It makes explicit 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 . . . .”4
The trial court, as well as the majority, relies heavily on this Court’s decision in Kraft v
Detroit Entertainment, LLC,5 for the proposition that plaintiff’s common-law claims are preempted
4
In a June 2022 letter, the MGCB indicated that defendant had violated the MGCB’s rules by not
timely informing the MGCB of the claimed malfunction and not timely providing information to
the MGCB when requested, but that “[t]he 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.” This determination
further reflects the MGCB’s role as one of taking licensing actions, not resolving patron disputes.
5
261 Mich App 534; 683 NW2d 200 (2004).
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by statute.6 The fraud claims in Kraft involved the design of the slot machines at issue that were
approved by the Gaming Board. Kraft7 described the machines and the source of the complaint:
These slot machines operate like traditional three-reel slot machines, but also
feature a “bonus wheel” that activates when a certain combination is displayed on
the slot machine reels. The bonus wheel consists of twenty-two equally
proportioned pie-shaped pieces and looks like the wheel utilized on the popular
television game show “Wheel of Fortune.” Each pie-shaped section has a number
between twenty and one thousand that represents the number of coins the player
wins when the wheel stops on that number. A computer program within the
machine determines where the bonus wheel will stop when it is activated. The
chances of stopping on one of the higher payoff numbers is significantly smaller
than the chances of stopping on one of the lower payoff numbers. [The
manufacturer’s] patent for these slot machines states that the bonus wheel can
provide players “a realistic sense of a totally mechanical indicator,” but that the
internal computer program will “randomly select the winning payout according to
a predetermined frequency of occurrence for each individual bonus payout, and
then cause the bonus indicator to stop at the desired area.”
The essence of the plaintiff’s fraud claim in Kraft was that the slot machine’s appearance gave the
impression that there was an equal chance of winning each of the different payoff amounts when,
in fact, the odds were significantly less for the higher payoff amounts.8
After discussing the preemption principle that laws, including the common law,
inconsistent with the gaming act are inapplicable, Kraft turns to the core question presented:
“Having concluded that MCL 432.203(3) precludes inconsistent common-law actions, we must
next determine whether recognizing plaintiff’s actions for fraud and unjust enrichment based on
defendants’ failure to disclose the odds of winning a large payoff on the ‘bonus wheel’ would be
‘inconsistent’ with the act.”9 The court determined that recognizing the plaintiff’s common-law
6
Kraft dealt with preemption by the Michigan Gaming Control and Revenue Act (MGCRA), MCL
432.201 et seq., which regulates physical casinos, rather than by LIGA, which regulates on-line
gaming. Both the majority and the trial court find that there are sufficient similarities between the
two acts to support reaching the same conclusion under LIGA as under MGCRA with respect to
preemption. Because I conclude that there are sufficient differences between the underlying claims
in this case and in Kraft, I need not address the debate between the similarities and the differences
of the two acts. That is, even if the similarities of the statutes are sufficient to conclude that Kraft
would guide the outcome in a case with similar facts under LIGA, the facts here are sufficiently
different so that Kraft is inapplicable.
7
261 Mich App at 537-538.
8
For example, although the “pie sections” were of equal size on the machine, the odds of winning
50 coins was 18 out of 256 spins, while winning 1,000 coins was 1 out of 256 spins. 261 Mich
App at 537-538 n2.
9
261 Mich App at 551.
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fraud and unjust enrichment claims would be inconsistent with the gaming act and the Board’s
authority to approve certain games:
Because the MGCB monitors casino games to ensure integrity and, thus, to
prevent fraud and deceit, we conclude that plaintiff’s common-law claims are
inconsistent with the MGCRA under MCL 432.203(3) and are thus inapplicable
against defendants. We agree with defendants and the trial court that recognizing
the common-law claims alleged by plaintiff would prohibit, through common-law
duties to disclose in the context of fraud or unjust enrichment, that which was
permitted by the MGCB under the MGCRA. Imposition of liability under those
circumstances would give rise to conflicting standards for gaming device
manufacturers and casino licensees because a casino licensee could use a gaming
device that had been vigorously tested and approved by the MGCB, only to have a
different standard imposed through the medium of the common law.
Or, to put it more simply, the Kraft court determined that the plaintiff could not maintain a claim
based upon an argument that, at its core, maintains that the Gaming Board should not have
approved this particular slot machine for use in a Michigan casino.
The case before of us, however, is not based upon a claim that plaintiff was lured into
playing “Luck O’ the Roulette” because she was misled into believing that her chances of winning
were greater than what they actually were.10 Rather, it is based upon a claim that defendant’s
platform informed her that she had won, that she had won a specific amount, and then defendant
refused to pay her the winnings.11
Next, the majority points to MCL 432.309, which sets forth the authority of the MGCB.
The statute provides an exhaustive list. But a review of that list reflects extensive authority over
the licensing of on-line casinos, an establishment of rules by which those licenses are obtained
10
Although there are some similarities between plaintiff’s fraud allegations in this case and those
in Kraft, there are significant differences as well. As discussed, the alleged fraud in Kraft was, in
essence, that the game design visually misrepresented the odds of winning a particular payout, thus
inducing the player to bet. Here, although plaintiff’s fraud allegations at least in part claim that
the fraud affected her betting decisions, it is not based upon a game design. Indeed, defendant’s
primary position is that plaintiff was credited with winnings that the game was not designed to
award, but rather upon a malfunction. While in Kraft the Gaming Board approved a game design
with the particular payout odds, presumably the Gaming Board in this case did not approve a game
that intentionally malfunctioned or otherwise intentionally mispresents the player’s winnings.
11
Even plaintiff’s fraud claim is framed differently than the claim in Kraft. It argues not a
fraudulent inducement in the design of the game, but that defendant left the game platform
operational for three days after it claims to have identified the malfunction allowing plaintiff and
other players to continue to play the game under a belief that the game was properly operating.
And plaintiff’s conversion and breach of contract claims, which are grounded in defendant’s
refusal to pay her winnings, bear even less resemblance to the claims in Kraft.
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(and perhaps revoked), casino operations, and procedures for sanctioning on-line casinos that
violate the statute and rules. What is not found in the list is the authority, much less the obligation,
to resolve individual patron disputes such as that presented here.12
I do not disagree with the majority that the Gaming Board has the authority and
responsibility to investigate defendant over this incident and determine what, if any, licensing
sanctions are appropriate.13 But plaintiff’s suit does not seek licensing sanctions against defendant;
plaintiff seeks payment of the money that defendant’s gaming platform told her that she had won.
I compare this case to administrative actions regarding licensed professionals and
malpractice. For example, if a physician harms a patient due to the physician’s professional
negligence, it may result in disciplinary action by the licensing board.14 Despite the administrative
remedies that incompetency imposes on a physician’s license, a patient who is harmed by that
incompetence may nevertheless pursue a tort claim for medical malpractice in circuit court. And
12
The majority also points to MCL 432.313, which establishes criminal penalties for various
violations of the act. It is certainly possible that defendant, if it intentionally took action to cheat
plaintiff out of her payout, may face criminal charges (assuming that it meets the definition of “a
person”). See MCL 432.313(1)(e). But any such charges are not litigated by or in front of the
Gaming Board; rather, criminal charges are brought by the attorney general or a county prosecutor
“in the county in which the violation occurred or in Ingham County.” MCL 432.313(5). If
anything, this section of LIGA demonstrates that the Gaming Board does not have exclusive
jurisdiction over all of internet gambling in Michigan.
13
As noted above, the Gaming Board chose to issue a warning and not pursue formal disciplinary
action.
14
MCL 333.16221 provides in pertinent part as follows:
Subject to section 16221b, the department shall investigate any allegation that 1 or
more of the grounds for disciplinary subcommittee action under this section exist,
and may investigate activities related to the practice of a health profession by a
licensee, a registrant, or an applicant for licensure or registration. The department
may hold hearings, administer oaths, and order the taking of relevant testimony.
After its investigation, the department shall provide a copy of the administrative
complaint to the appropriate disciplinary subcommittee. The disciplinary
subcommittee shall proceed under section 16226 if it finds that 1 or more of the
following grounds exist:
(a) Except as otherwise specifically provided in this section, a violation of general
duty, consisting of negligence or failure to exercise due care, including negligent
delegation to or supervision of employees or other individuals, whether or not
injury results, or any conduct, practice, or condition that impairs, or may impair,
the ability to safely and skillfully engage in the practice of the health profession.
MCL 333.16226 provides for a variety of sanctions, including revocation of a license.
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this is true even though there is an extensive administrative framework regarding the licensing and
discipline of medical professionals.15
Clearly, administrative oversight of a licensed profession or business does not preclude tort
or contract suits in circuit court arising out of alleged misconduct by that professional or business.
Indeed, the Legislature can vest exclusive jurisdiction in administrative agencies,16 as this Court
observed in another casino case, Papas v Gaming Control Board:17
Circuit courts are courts of general jurisdiction, vested with original
jurisdiction over all civil claims and remedies “except where exclusive jurisdiction
is given in the constitution or by statute to some other court....” MCL § 600.605;
Bowie v Arder, 441 Mich 23, 50; 490 NW2d 568 (1992). In Citizens for Common
Sense in Gov’t, [243 Mich App 43, 50; 620 NW2d 546 (2000)], this Court
explained:
The circuit courts of this state have subject-matter jurisdiction to
issue declaratory rulings, injunctions, or writs of mandamus. Const
1963, art 6, § 13; MCL § 600.605.... However, if the Legislature has
expressed an intent to make an administrative tribunal’s jurisdiction
exclusive, then the circuit court cannot exercise jurisdiction over those
same areas. MCL § 600.605....
This Court has not required the phrase “exclusive jurisdiction” to appear in a
statutory provision in order to find that jurisdiction has been vested exclusively in
an administrative agency. Capital Region Airport Auth v DeWitt Charter Twp, 236
Mich App 576, 590-591; 601 NW2d 141 (1999). As long as the statutory language
chosen by the Legislature establishes the intent to endow the state agency with
exclusive jurisdiction, courts must decline to exercise jurisdiction until all
administrative proceedings are complete. Id.Although the Papas majority concluded that the MGCB had exclusive jurisdiction in that case,
like Kraft, it involved the question of licensing. Specifically, whether the owners of several
hospitality businesses had to be licensed as “suppliers” to the Greektown Casino in order to accept
vouchers issued by the casino to casino patrons and be reimbursed by the casino. This Court
concluded that the determination whether the plaintiffs were “suppliers,” and thus required to be
licensed by the defendant, came within the defendant’s exclusive jurisdiction.
15
Indeed, one might argue that the administrative oversight of medical professionals is even more
extensive than that of internet casinos under LIGA.
16
For example, the worker’s disability compensation act of 1969, MCL 418.101, establishes an
extensive administrative schema to resolve disputes over the payment of compensation benefits.
And, that process is ultimately subject to judicial review. MCL 418.861a(14).
17
257 Mich App 647, 657; 669 NW2d 326 (2003).
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In sum, 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.18
Accordingly, I disagree with the majority that plaintiff cannot pursue her claims in circuit court.
And by 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.
I would reverse.
/s/ Kathleen A. Feeney
18
Except, of course, to the extent that the basis of those claims also give rise to sanctions against
the casino’s license, like a physician who might face both a malpractice suit and the revocation of
their medical license arising from the negligent care.
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