Phillips v. Double Down Interactive LLC

173 F. Supp. 3d 731, 2016 U.S. Dist. LEXIS 39189, 2016 WL 1169522
CourtDistrict Court, N.D. Illinois
DecidedMarch 25, 2016
DocketNo. 15 C 04301
StatusPublished
Cited by6 cases

This text of 173 F. Supp. 3d 731 (Phillips v. Double Down Interactive LLC) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Phillips v. Double Down Interactive LLC, 173 F. Supp. 3d 731, 2016 U.S. Dist. LEXIS 39189, 2016 WL 1169522 (N.D. Ill. 2016).

Opinion

Memorandum Opinion and Order

Honorable Edmond E. Chang, United States District Judge

Margo Phillips brings this proposed class-action suit against Double Down Interactive LLC, alleging that Double Down’s online casino games are not just games — they are unlawful gambling devices under Illinois state law.1 R. 18, Am. [734]*734Compl.2 Phillips seeks to force Double Down to stop operating those alleged devices, and she also wants to recover all lost monies paid to the online casino. Id. Double Down has 'moved to dismiss all counts in Phillips’s First Amended Complaint.3 R. 24. For the following reasons, Double Down’s motion is granted.

I. Background

For purposes of this motion, the Court accepts as true the factual allegations in the First Amended Complaint and draws all reasonable inferences in the plaintiffs favor. McGowan v. Hulick, 612 F.3d 636, 637 (7th Cir.2010). Double Down Interactive LLC is owned by International Game, Technology (IGT),- a large publicly-owned designer and manufacturer of traditional gambling games. R. 18, Am. Compl. ¶ 20. Double Down operates a virtual casino called “Double Down Casino.” Id. ¶¶ 1, 18. Players can access Double Down Casino through its website or through its free application, which can be downloaded on mobile devices like iPhones and Android phones. Id. ¶¶ 1, 18, 33. Players can also access Double Down Casino through Face-book. Id. ¶ 18. In its marketing descriptions, Double Down describes the online casino as “the FULL casino experience.” Id. ¶ 19 (emphasis in original). Some of the electronic games offered in Double Down Casino include “authentic” slot machines, roulette, poker and black jack. Id. ¶¶ 1,19. All of Double Down’s casino games are games of chance, as each game’s outcome is determined solely by Double Down’s computerized algorithms. Id. If 30.

To play the- Casino’s games, players must have virtual “chips.” Id. 2: Players use these chips to wager on the games. Id. First-time visitors to the site are offered a bundle of free chips (one million chips, to be exact) with which to play. Id. ¶¶ 2, 24. Returning players are offered additional virtual chips free of charge each day. R. 1, Exh. E ¶4 (John Clelland Deck); R. 51, Pl'.’s Resp. to Def.’s' Second Citation to Add’l Authority, at 2 n.2 (noting that players are awarded free chips on Double Down’s website and citing, without contesting, Double Down’s assertion that returning players are given additional free chips each day); see also Double Down Casino,. http://www.doubledowncasino.com (last visited March 25, 20Í6) (website states: “Return to the game daily and receive more free ’chips every day.”). To begin playing, players select the amount of chips they would like to wager on a particular game. Am. Compl. ¶ 28. For example, if playing a slot machine, a player would select how many chips he or she wishes to [735]*735bet on a particular spin. Id. If the player wins that game or spin, then that player is awarded more virtual chips with which to play. Id. ¶¶31, 32. If that player loses, however, then he or she may lose some or all of the betted chips, depending on the game. Id. ¶35. Regardless of the game played, the only thing a player can win from the casino is more virtual chips. Id. ¶¶ 3, 30-33. If players run out of free chips, then Double Down Casino gives players the option to buy more chips. Id. ¶ 26. For example, a player can buy 150,000 chip’s for $3.00, one million chips for $8.00, or as many as 100 million chips for $99.00. Id. (Prices vary slightly depending on whether the player is accessing Double Down Casino through a computer or. mobile device. Id.) The player can also wait a day for the next free allotment of chips if the player does not want to buy chips (Phillips does not challenge this factual assertion made by Double Down). R. 1, Exh.- E ¶ 4 (John Clelland Deel.); R. 51, PL’s Resp. to Def.’s Second Citation to Add! Authority, at 2 n.2.

Double Down Casino chips can only be used to play its online games. Double Down does not offer any cash for the virtual chips, meaning players are not able to “cash out” their chips with Double Down for ‘“real world’ money, goods, or other items of monetary value.” R. 27-1, Exh. A, Rebekah H. Parker Deck at 6 (Double Down’s “Terms of Use,” available at http://www.doubledowncasino.com); R. 36-1, Pl.’s Resp. Br. at 110 (noting that “[w]hen players win or buy ... Chips, they can either use the chips to make future wagers or ‘cash out’ by selling their Chips to other Double Down Casino players on an external ’black market.’ ”); Am. Compl'. ¶ 34' (alleging that players can cash out their accounts on the secondary market only); see also R. 51, PL’s Resp. to Def.’s Second Citation to Add’l Authority, at 3. .According to the site’s Terms of Use, Double Down specifically “prohibit^]” the “transfer of Virtual Currency [that is, virtual chips]” and requires players to agree that they will not, “[t]ransfer, sell, or resell” chips to- any other ■ party. R. 27-1, Exh. A, Rebekah H. Parker Deck at 6. But even so, according to Phillips (and accepted as true for deciding the dismissal motion), players- are still able to “cash out” their chips by listing their1 accounts on the secondary market. Am. Compl. ¶ 34.

As part of its recordkeeping, Double Down keeps track of each wager, outcome, and win made by each player. Id. ¶ 36. It also regularly analyzes how “chips are consumed”; that is, how long’ it takes for players to run out of chips. Id. ¶ 37. It is through the sale of chips that Double Down (and in .turn, its parent company IGT) earns revenue. Id. ¶ 21; R. 27-1, Exh. B, IGT Form 10-K at 7. In 2014, for example, Double Down (as reported in IGT’s annual SEC filings) reported over $240 million in revenue.4 Am. Compl. ¶ 23; IGT Form 10-K at 36. For accounting reasons, IGT keeps track of not only Double Down’s revenue, but 'also its “bookings,” or “the total amount of virtual casino chips sold during [a] period.” IGT Form 10-K at 7. IGT tracks this information because it defers the recognition of Double Down’s revenue “based on the estimated period of chip consumption?’ Id. at 7, 64. In other words, for accounting-reporting purposes, Double Down does not realize all of its chip sales in the fiscal period in [736]*736which those chips are sold; rather, it defers the recognition Of its chip sales until the chips are estimated to have been consumed (that is, wagered on games), which could, but does not have ,to be, in the same fiscal period the chips are bought. Id. at 64.

Around January 2013, Phillips began playing games at Double Down Casino through- her Facebook- account. Am. Compl. ¶38. After she used all of her initial free chips (that is, the one million chips given to first-time users), she began buying chips. Id. From January 2013 to April 2015, Phillips ■ played a variety of Double Down’s slots and roulette games, each time wagering her chips in an attempt to win additional chips. Id. ¶ 39. Phillips alleges that during that same time period — from January 2013 to April 2015 — she wagered and lost over $1,000 worth of chips. Id.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Dew-Becker v. Wu
2018 IL App (1st) 171675 (Appellate Court of Illinois, 2018)
Cheryl Kater v. Churchill Downs Inc.
886 F.3d 784 (Ninth Circuit, 2018)
Messina v. Green Tree Servicing, LLC
210 F. Supp. 3d 992 (N.D. Illinois, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
173 F. Supp. 3d 731, 2016 U.S. Dist. LEXIS 39189, 2016 WL 1169522, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phillips-v-double-down-interactive-llc-ilnd-2016.