Phillips v. Double Down Interactive LLC
173 F. Supp. 3d 731
N.D. Ill.2016Background
- Plaintiff Margo Phillips played Double Down Casino (an IGT-owned social casino app) from Jan. 2013–Apr. 2015, using free and purchased virtual chips; she alleges losing over $1,000 and at least $59 within six months before filing.
- Double Down awards free chips to new and returning players; players may purchase chips for real money but cannot cash out chips directly through Double Down (though a secondary market exists).
- Double Down recognizes revenue from chip sales but defers accounting recognition based on estimated chip consumption. Double Down reported substantial revenue from social gaming.
- Phillips filed a putative Illinois class action asserting: (1–2) violations of the Illinois Loss Recovery Act (720 ILCS 5/28-8) to recover gambling losses, (3) ICFA (consumer fraud), and (4) unjust enrichment.
- Double Down moved to dismiss all counts. The district court granted the motion with prejudice, concluding Double Down was not a “winner” and Phillips was not a statutory “loser,” and dismissing the ICFA and unjust-enrichment claims tied to the same allegations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Double Down’s online games are "gambling devices" under the Illinois Loss Recovery Act | Phillips: online app and virtual chips are devices/"things of value" used to stake wagers | Double Down: statute’s examples imply tangible machines; virtual chips lack "thing of value" status | Court: statutory language and precedent permit non‑mechanical devices, but disposition rests on absence of winner/loser, so need not decide chips’ value definitively |
| Whether Double Down is a "winner" (and plaintiff a "loser") under the Loss Recovery Act | Phillips: revenue deferral shows Double Down’s direct stake; players lose value when chips are consumed | Double Down: it never risks its own funds—keeps money from chip sales regardless of game outcomes, so it is not a winner | Court: Double Down is not a winner because it never puts its money at stake; Phillips is not a statutory loser; Loss Recovery Act claims fail |
| Whether Phillips adequately pleaded amount/timing of loss under §28-8(a) | Phillips: alleged specific purchases and losses (e.g., $59 on Mar 7, 2015; $1,000 total) satisfying $50 and six‑month threshold | Double Down: challenges sufficiency | Court: if losses counted, pleading would suffice as to amount/timing, but statutory recovery requires a winner/loser so claims still fail |
| Whether ICFA and unjust-enrichment claims survive | Phillips: conduct is unfair, offends public policy, exploits addiction, causes substantial injury | Double Down: no statutory violation; consumers had meaningful alternatives; no unavoidable injury | Court: ICFA fails (no public‑policy violation, no unavoidable substantial injury); unjust enrichment fails because it duplicates dismissed claims |
Key Cases Cited
- Bell Atl. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible to survive Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (distinguishes factual allegations from legal conclusions for pleading standard)
- McGowan v. Hulick, 612 F.3d 636 (7th Cir. 2010) (accept factual allegations as true on motion to dismiss)
- Sonnenberg v. Amaya Grp. Holdings (IOM) Ltd., 810 F.3d 509 (7th Cir. 2016) (interpreting "winner"/recovery under Illinois gambling statute)
- Reuter v. MasterCard Int'l Inc., 397 Ill. App. 3d 915 (Ill. App. Ct. 2010) (loss‑recovery claims require a winner who directly participated or had stake)
- People v. McDonald, 26 Ill.2d 325 (Ill. 1962) (broad construction of "gambling device" beyond mechanical machines)
- Batson v. Live Entm't, Inc., 746 F.3d 827 (7th Cir. 2014) (ICFA protects against unfair or deceptive practices)
- Robinson v. Toyota Motor Credit Corp., 201 Ill.2d 403 (Ill. 2002) (ICFA unfairness factors: public policy, immoral/unscrupulous conduct, substantial injury)
- Siegel v. Shell Oil Co., 612 F.3d 932 (7th Cir. 2010) (ICFA requires unfair or deceptive conduct)
- HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 131 Ill.2d 145 (Ill. 1989) (elements of unjust enrichment in Illinois)