Michigan Supreme Court: Common-law lawsuits against gaming licensees are permissible for online gamblers

In a unanimous decision, the Michigan Supreme Court mandated that BetMGM be sued for a $3.2 million gambling dispute. This historic ruling overturns lower courts’ rulings that state law prohibited such litigation and reinstates customer Jacqueline Davis’ fraud and contract claims.

The Michigan Supreme Court decided unanimously on Tuesday that a customer of an online gambling establishment may file a common-law lawsuit against the owner of a gambling license for fraud, conversion, and breach of contract, allowing a legal battle over substantial online betting winnings to proceed.

The Michigan Legislature did not intend for the Lawful Internet Gambling Act to exclude litigants from pursuing common-law claims pertaining to gambling disputes between a customer and a gambling licensee, according to the high court’s majority decision in Davis v. BetMGM, which was authored by Justice Brian Zahra.

This indicates that two lower court rulings from the Wayne County Circuit Court and the Michigan Court of Appeals were reversed, and the lower court now has the authority to hear the matter going forward.

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In one example, a BetMGM customer named Jacqueline Davis won a sizable wins pot, from which the player took out $100,000. At that point, BetMGM stopped her access to the remaining amount, around $3.2 million, and suspended her account.

BetMGM investigators concluded that the player’s funds had been mistakenly credited and terminated the account. The Wayne Circuit Court decided that it lacked the subject matter jurisdiction to hear Davis’ lawsuit, which was filed on grounds of fraud and breach of contract. The judge pointed out that the claims were preempted by the Lawful Internet Gambling Act.

While the appeal was pending, a complaint was submitted to the Michigan Gaming Control Board; however, the Michigan Court of Appeals upheld the lower court’s ruling in a published 2-1 ruling.

The question of whether the board or the court had jurisdiction was referred to the high court.

According to Zahra, it did so because, aside from the impact of legislative purpose, common-law claims—such as complaints of breach of contract—were not so incompatible with the Lawful Internet Gambling Act that the law could preempt them.

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