Michigan Supreme Court Greenlights Common-Law Lawsuits Against Gambling Operators
The Michigan Supreme Court has ruled that individuals may bring common-law claims such as fraud, breach of contract and conversion against licensed gambling operators, even when those claims arise from disputes related to online gambling. In a unanimous decision issued on Tuesday, the court determined that the state's Lawful Internet Gambling Act does not preempt such civil lawsuits, clearing the way for a high-profile case involving a dispute between a player and BetMGM to proceed in lower court.
LISTEN TO THIS ARTICLE:The decision was issued in the case of Davis v. BetMGM, in which plaintiff Jacqueline Davis alleges she was wrongfully denied access to multimillion-dollar winnings. After withdrawing $100,000 in online winnings, Davis's account was frozen, and access to the remaining balance, reported to be approximately $3.2 million, was denied. BetMGM conducted an internal review and concluded that the funds had been erroneously credited.
Related: MGM Resorts Cleared in $25M Gambling Addiction CaseThe company then permanently closed her account. In response, Davis filed a lawsuit alleging fraud and breach of contract. However, the Wayne County Circuit Court ruled that it did not have jurisdiction, citing that the Lawful Internet Gambling Act governed the dispute and thus preempted the claims.
That ruling was upheld by the Michigan Court of Appeals in a 2-1 decision. The appellate court found that jurisdiction rested with the Michigan Gaming Control Board, not the courts, essentially barring Davis's claims from being heard in civil court. A complaint had also been filed with the Michigan Gaming Control Board while the appeal was ongoing, adding another layer to the jurisdictional question at the heart of the case.
The state's highest court, however, disagreed with the lower courts' interpretation. In an opinion authored by Justice Brian Zahra, the justices found no indication that the legislature intended to block common-law claims through the enactment of the Lawful Internet Gambling Act.
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Zahra wrote that while the Act governs regulatory matters and licensing, it does not extinguish an individual's ability to pursue remedies for wrongful conduct under long-standing principles of common law. He added that these types of claims, such as breach of contract, do not conflict with the objectives of the Act and are, therefore, not preempted.
As a result of the Supreme Court's ruling, both the Court of Appeals and the Circuit Court decisions were overturned. The case will now return to the lower court system, where Davis's claims against BetMGM may be fully considered under Michigan civil law. The ruling establishes a significant precedent for Michigan's gambling landscape, affirming that regulatory frameworks do not necessarily shield gambling licensees from civil liability when private disputes arise between operators and patrons.
This ruling could have implications for future litigation involving online gambling in Michigan, where regulatory oversight and private contractual relationships may intersect. It reinforces the principle that statutory regulation does not automatically eliminate traditional legal rights unless the legislature explicitly states such intent.
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