DoubleDown Phillips class action Lawsuit Fails
Thursday March 31,2016 : ILLINOIS JUDGE NIXES ‘LOSER' CLASS ACTION AGAINST DOUBLEDOWN ONLINE SOCIAL CASINO (Update)
Phillips class action fails.
In Illinois, a class action attempt to sue IGT's online social casino DoubleDown under an archaic state law allowing gamblers to claim losses has failed before federal judge Edmond E. Chang.
Our readers will recall that Illinois resident Margo Phillips filed the action last year, claiming that over time she lost a thousand dollars spent buying over 35 million virtual chips to use in the casino. She alleged the company’s online games violated Illinois gambling law, and filed to force the company to stop running the games and to recover money she paid the online casino.
Double Down successfully removed the case to federal court, then moved to dismiss all counts.
The publication Cook County Record reports that the judge ruled that unless “the house” runs the risk of allowing contestants to win some actual coin, the games it hosts cannot be considered gambling.
The court action revealed that from January 1, 2013, to March 31, 2015, nearly 18,000 people from Illinois accessed the DoubleDown casino site directly, or through Facebook or its mobile app, or bought at least $50 worth of virtual gaming credits using a device with an Illinois Internet protocol address.
In 2014 the company reported more than $240 million in revenue.
The site lets players use virtual “chips” to play online versions of slot machines and roulette tables as well as poker and blackjack. First-time players get a million free chips; and returning players are awarded a daily allocation of free virtual chips to play the games.
Players who run out of free chips may buy more, up to as many as 100 million chips for $99. While some players sell chips to other players on an external “black market,” the company’s terms of use specifically prohibit that practice.
DoubleDown argued that its virtual chips are not items of value when used on the website, and that under state law its activity does not constitute gambling and is therefore not illegal.
Although Judge Chang rejected Double Down’s arguments that its online games are materially different from the real-world casino standards, and found that that it could be classified as a device for gambling, he supported the social casino's argument that its games do not, as the Illinois Loss Recovery Act defines, have a “loser” or “winner.”
The casino operator has no stake in the outcome of the actual games – once a player buys chips, Double Down cannot lose that money back to the player. The only risk is that a player might choose not to buy more chips if their virtual winnings are sufficient.
“Double Down still never puts any of its own money at risk in the online games,” Chang wrote in his judgement, “and risking potential future sales is not the same thing.”
The failure to sufficiently argue that what Double Down offers is gambling under state statute ultimately undercut all of Phillips’ arguments, and Judge Chang dismissed the entire complaint with prejudice.
