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Loss Recovery Act has again been defeated in a class action lawsuit
ILLINOIS JUDGE THROWS OUT LOSS RECOVERY CASE
Game developer Machine Zone cleared on gambling allegations.
Illinois notorious Loss Recovery Act has again been defeated in a class action lawsuit...this one emanating from in-game activity on a mobile social gaming video game.
The LRA is a contentious piece of legislation that allows players who lose more than $50 gambling to recover their losses from an unlawful gambling operator. To prove a violation of these statutes, the plaintiff must show that the defendant was the winner of the plaintiff’s gambling losses.
In the latest case, as reported by the publication Lexology, a game titled "Game of War", developed by the Machine Zone company, was at issue. The mobile app is downloaded f.o.c. and contains a casino gambling element that allows users to win free spins on a virtual wheel. These spins can lead to the award of prizes such as chips, which can be used to win more free spins. Chips can also be purchased for real money in-app, but cannot be remitted for cash by the player.
The plaintiffs in the class action claimed that Machine Zone was effectively operating a gambling device which resulted in a loss greater than $50, entitling them to invoke the LRA and the Illinois Consumer Fraud and Deceptive Business Practices Act (“IFCA”).
The lead plaintiff, Mihajlo Ristic, told the court that over a period last year he had spent $500 buying chips over and above his free chip winnings in order to keep playing the game.
Federal Judge Robert Dow heard the case and dismissed it with prejudice, concluding that Ristic, had not proved that Machine Zone had directly won his losses. The judge noted that in fact Machine Zone keeps the money a player pays to buy additional chips, regardless of the prize the player might win in the casino, and that therefore the player does not win or lose that money.
Machine Zone was not putting any of its own money at risk in the game, the judge found; the developers risk was associated only with potential future game sales.
The case sets another precedent in an environment where social gaming - often involving in-app casino games - continues to grow, with companies no doubt noting that as long as they do not risk their own money as a consequence and integral part of the transaction, and do not enable users to convert chips to cash, they are within the law, particularly in Illinois
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