Justia Gaming Law Opinion Summaries

TwinSpires, an Oregon-based electronic wagering platform, facilitates interstate betting on horseraces. Under the federal Interstate Horseracing Act (IHA), such betting is lawful if the operator obtains consent from both the state where the bet is accepted and the state where the race occurs, as well as the relevant racetrack. Michigan, however, enacted a law requiring additional state-specific licensing for platforms like TwinSpires to accept bets from Michigan residents. After TwinSpires partnered with Michigan’s only racetrack and obtained the requisite license, its license was suspended when the racetrack temporarily lost its own license. Even after the racetrack’s license was restored, Michigan maintained the suspension of TwinSpires’ license, prompting the company to sue, arguing that Michigan’s requirements conflicted with the IHA.The United States District Court for the Western District of Michigan granted a preliminary injunction, preventing Michigan from enforcing its licensing requirements against TwinSpires. The district court found that the IHA preempted Michigan’s additional licensing regime, concluding that TwinSpires was likely to succeed on the merits of its preemption claim and that other injunction factors favored TwinSpires.The United States Court of Appeals for the Sixth Circuit reviewed the preliminary injunction for abuse of discretion, applying de novo review to legal conclusions and clear error review to factual findings. The Sixth Circuit affirmed the district court’s order, holding that the IHA conflict-preempts Michigan’s licensing requirement for interstate wagering platforms. The court concluded that Michigan’s law imposed an additional regulatory hurdle beyond what the IHA requires, interfering with the federal scheme and frustrating Congress’s intended objectives. The court also found that the remaining factors for a preliminary injunction—irreparable harm, balance of equities, and public interest—favored TwinSpires. View "Churchill Downs Tech. Initiatives Co. v. Mich. Gaming Control Bd." on Justia Law

In this case, two federally recognized tribes in Madera County, California, were involved in a dispute over the authorization of a casino. One tribe, North Fork, sought to build and operate a large off-reservation casino on a 305-acre site near State Route 99. To do so, North Fork obtained a favorable “two-part determination” from the Secretary of the U.S. Department of the Interior, followed by a concurrence from the Governor of California, and the negotiation of a tribal-state compact. The compact was ratified by the Legislature. However, a statewide referendum (Proposition 48) resulted in California voters rejecting the ratification statute. The other tribe, Picayune-Chukchansi, which operated its own on-reservation casino, challenged the validity of the Governor’s concurrence, arguing it was rendered void by the voters’ rejection.Prior to this appeal, the matter was litigated in multiple forums. In the Madera County Superior Court, Picayune-Chukchansi sought declaratory relief to have the Governor’s concurrence declared void ab initio. Proceedings were stayed pending appellate decisions in related cases, including United Auburn Indian Community of Auburn Rancheria v. Newsom by the California Supreme Court, which recognized the Governor’s implied authority to concur, and Stand Up for California! v. State of California (Stand Up II) by the Court of Appeal, which held that the people retained the power to annul the Governor’s concurrence through a referendum. The trial court ultimately granted summary judgment in favor of Picayune-Chukchansi, declaring the Governor’s concurrence void from the outset.On appeal, the California Court of Appeal, Fifth Appellate District, affirmed the trial court’s judgment. The court held that the people of California, by rejecting Proposition 48, exercised their retained power to annul the Governor’s concurrence, and that this annulment rendered the concurrence void ab initio—meaning it never took effect and is not in effect. The court also found that the dispute was not moot and that the Governor’s authority to concur is subject to the electorate’s overriding power under California constitutional law. View "Picayune Rancheria v. North Fork Rancheria" on Justia Law

James Weiss owned a company that manufactured sweepstakes machines, which in 2018 operated in a legal gray area under Illinois law. Seeking to secure favorable legislation, Weiss arranged for his company to make monthly payments to a lobbying firm owned by State Representative Luis Arroyo, who then became a vocal advocate for legalizing sweepstakes machines. After initial legislative efforts failed, Weiss and Arroyo sought to amend existing gaming legislation by enlisting the support of State Senator Terrance Link. Unbeknownst to them, Link was cooperating with federal authorities. During meetings, Arroyo assured Link he would be compensated for his support, and Weiss’s company provided checks intended for Link under a fictitious name created by the FBI. Weiss was later stopped by FBI agents, interviewed without Miranda warnings, and made false statements during the encounter.The United States District Court for the Northern District of Illinois, Eastern Division, denied Weiss’s pretrial motions to suppress his statements to the FBI and to exclude Arroyo’s recorded statements. At trial, the jury heard evidence of the bribery scheme, including testimony from Link and federal agents, and found Weiss guilty on all charges after deliberation. The district court sentenced Weiss to 66 months’ imprisonment, exceeding the calculated guidelines range, and declined to delay sentencing for anticipated changes to the Sentencing Guidelines.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed Weiss’s challenges to the admission of his statements, the admission of Arroyo’s statements as coconspirator statements, the jury instructions regarding “official acts,” and the sentence imposed. The Seventh Circuit held that Weiss was not in custody for Miranda purposes during the FBI interview, the district court did not err in admitting Arroyo’s statements, the jury instructions did not constitute plain error, and the sentence was both procedurally and substantively reasonable. The court affirmed the district court’s judgment in all respects. View "United States v. Weiss" on Justia Law

Jacqueline Davis filed a lawsuit against BetMGM, LLC, in the Wayne Circuit Court, claiming fraud, conversion, and breach of contract after winning over $3 million on BetMGM's online gambling platform. BetMGM approved her withdrawal of $100,000 but later suspended her account, citing a game malfunction that erroneously credited her winnings. BetMGM refused to remit the remaining winnings, leading Davis to file a complaint with the Michigan Gaming Control Board (MGCB) and subsequently in court.The Wayne Circuit Court granted BetMGM's motion for summary disposition, ruling that the Lawful Internet Gaming Act (LIGA) preempted Davis's claims and that the MGCB had exclusive jurisdiction over online gambling disputes. The court relied on caselaw interpreting the Michigan Gaming Control and Revenue Act (MGCRA) and administrative rules under the LIGA, concluding that the LIGA precluded inconsistent common-law claims. Davis's motion for reconsideration was denied.The Michigan Court of Appeals affirmed the circuit court's decision in a split decision. The majority agreed with the lower court's reasoning, while the dissent argued that the MGCB did not have the authority to resolve individual patron disputes and that Davis's claims were not inconsistent with the LIGA. The dissent also noted that the MGCB's role was limited to investigating violations of the LIGA and did not extend to adjudicating disputes between patrons and licensees.The Michigan Supreme Court reversed the Court of Appeals' decision, holding that the LIGA did not abrogate common-law claims of fraud, conversion, and breach of contract. The court clarified that the correct principle to apply was abrogation, not preemption, and found no clear legislative intent to abrogate these common-law claims. The court also determined that Davis's claims were not inconsistent with the LIGA, as the MGCB did not have the authority to resolve such disputes. The case was remanded to the circuit court for further proceedings. View "Davis v. BetMGM, LLC" on Justia Law

IGT owns an expired U.S. Patent No. 7,168,089, which addresses secure communication in gaming environments. In 2003, Zynga's predecessor copied claims from IGT's application into its own, leading to an interference declared by the Board of Patent Appeals and Interferences in 2010. Zynga moved for judgment that IGT's claims were unpatentable for obviousness, but the Board dismissed this motion as moot, terminating the interference because Zynga's claims lacked written description support.In 2021, Zynga petitioned for an inter partes review (IPR) of certain claims of IGT's patent, alleging obviousness based on new prior-art references. IGT argued that interference estoppel barred Zynga's challenge. The Patent Trial and Appeal Board (PTAB) instituted the IPR, rejecting the estoppel argument, and the Director of the PTO affirmed this decision. The PTAB ultimately found all challenged claims unpatentable for obviousness.The United States Court of Appeals for the Federal Circuit reviewed the case. The court held that the PTAB's decision not to apply interference estoppel was unreviewable under 35 U.S.C. § 314(d), as it was closely tied to the decision to institute the IPR. The court also found no "shenanigans" or legal errors in the PTAB's decision. On the merits, the court affirmed the PTAB's findings that the prior art taught the claimed elements, including the "software authorization agent" and the required messages for authorizing gaming software transfers. The court concluded that substantial evidence supported the PTAB's findings and affirmed the decision. View "IGT v. Zynga, Inc." on Justia Law

The plaintiffs filed lawsuits against two online-game companies, alleging that the companies' casino-themed social gaming applications constituted illegal gambling. The plaintiffs sought to recover money lost by Alabama residents who played these games, on behalf of the players' families, under an Alabama statute that allows such recovery. The plaintiffs did not play the games themselves and did not name any specific Alabama residents who had played the games.The defendants moved to compel arbitration based on the arbitration agreements included in the terms of service for the games, which players agreed to when they downloaded the games. The defendants also moved to dismiss the cases, arguing that the plaintiffs could not pursue mass claims on behalf of all Alabama residents who played the games and that the games were not gambling. The Franklin Circuit Court denied both the motions to compel arbitration and the motions to dismiss.The Supreme Court of Alabama reviewed the case and held that the plaintiffs, in asserting claims under the Alabama statute, were standing in the legal shoes of the players who had agreed to arbitrate their claims. Therefore, the plaintiffs' claims must be arbitrated. The court reversed the trial court's orders denying the motions to compel arbitration and remanded the cases for the trial court to grant the motions. View "Zynga, Inc. v. Mills" on Justia Law

The case involves a challenge to the constitutionality of 2021 La. Acts, No. 437, which legalized historical horse racing without requiring voter approval in the affected parishes. Historical horse racing uses an algorithm based on the results of previously run horse races, with bets made at terminals similar to slot machines. Plaintiffs, residents of five parishes where historical horse racing could be conducted, argued that the Act violated Article XII, section 6(C) of the Louisiana Constitution, which requires voter approval for any new form of gaming not specifically authorized before the effective date of the amendment.The 19th Judicial District Court, Parish of East Baton Rouge, found that the plaintiffs had standing to challenge the Act and granted summary judgment in their favor. The court declared historical horse racing a new form of gaming requiring local voter approval and declared Act 437 unconstitutional. The defendants appealed the decision.The Supreme Court of Louisiana reviewed the case and affirmed the lower court's decision. The court held that historical horse racing is a new form of gaming not authorized in Louisiana before October 15, 1996, and therefore requires prior voter approval in a local election as mandated by Article XII, section 6(C) of the Louisiana Constitution. The court concluded that Act 437 is unconstitutional for allowing historical horse racing without the required voter approval. View "FREMIN VS. BOYD RACING, LLC" on Justia Law

Several applicants sought licenses to operate video gaming terminals under Pennsylvania's Video Gaming Act, which requires applicants to demonstrate "good character, honesty, and integrity." The Pennsylvania Gaming Control Board denied the applications of Todd Teitelbaum, Michael Brozzetti, and Frank Brozzetti, citing their involvement in the skill games industry, which the Board viewed as unregulated and problematic. The Board's decision was based on general criticisms of the skill games industry, including the lack of regulatory safeguards and the economic impact on casinos and the lottery.The Commonwealth Court reviewed the Board's decision and reversed it, finding that the Board's rationale was insufficient. The court noted that the Board's decision relied solely on generalizations about the skill games industry and did not provide specific evidence regarding the applicants' personal character, honesty, or integrity. The court highlighted the absence of any criminal convictions, tax evasion, connections to organized crime, or other nefarious conduct by the applicants. The Commonwealth Court concluded that the Board's decision was arbitrary and an abuse of discretion.The Supreme Court of Pennsylvania reviewed the case and agreed with the Commonwealth Court that the Board's decision was arbitrary and capricious. The Supreme Court noted that the Board failed to provide specific evidence regarding the applicants' personal qualities and relied solely on general criticisms of the skill games industry. However, the Supreme Court vacated the Commonwealth Court's order to issue the licenses, remanding the case to the Board for further consideration of the applications without directing any particular outcome. The Supreme Court emphasized that the Board's discretion is not absolute and must be based on reason and specific evidence related to the applicants. View "Brozzetti v. PGCB" on Justia Law

Gina Burt filed a lawsuit against Playtika, Ltd. and Playtika Holding Corporation in Tennessee state court, seeking to recover alleged gambling losses incurred by Tennessee residents who played Playtika’s online games. Burt's claim was based on Tennessee Code Ann. § 29-19-105, which allows recovery of gambling losses. Playtika removed the case to federal court, invoking jurisdiction under the Class Action Fairness Act (CAFA) and traditional diversity jurisdiction.The United States District Court for the Eastern District of Tennessee remanded the case to state court. The district court determined that it lacked jurisdiction because Burt’s suit was not a “class action” under CAFA, and the losses of the Tennessee players could not be aggregated to meet the amount in controversy requirement for traditional diversity jurisdiction. Playtika appealed the remand order under CAFA’s expedited removal appeal provision.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court’s remand order. The appellate court held that Burt lacked Article III standing to proceed in federal court because she did not allege that she personally suffered any gambling loss. The court found that Burt’s claim to recover losses on behalf of other Tennessee residents did not satisfy the injury-in-fact requirement for standing. Additionally, the court rejected Burt’s argument that she had standing under a qui tam theory, concluding that Tennessee Code Ann. § 29-19-105 is not a qui tam statute. Consequently, the court affirmed the district court’s decision to remand the case to state court. View "Burt v. Playtika, Ltd." on Justia Law

Plaintiffs, who are California residents and cardroom operators, challenged the constitutionality of California Business and Professions Code §§ 19858(a) and 19858.5. These statutes make a person ineligible for a California cardroom license if they own more than a 1% financial interest in a business that engages in casino-style gambling or if they have control over such a business. Plaintiffs argued that these provisions violate the dormant Commerce Clause by discriminating against interstate commerce, regulating extraterritorially, and unduly burdening interstate commerce.The United States District Court for the Eastern District of California initially dismissed the complaint as untimely, but the Ninth Circuit reversed that decision. On remand, the district court rejected plaintiffs' dormant Commerce Clause claims, concluding that the statutes did not discriminate against interstate commerce, did not regulate extraterritorially, and did not unduly burden interstate commerce. Plaintiffs appealed this decision.The United States Court of Appeals for the Ninth Circuit affirmed the district court's judgment. The court held that the cardroom licensing restrictions do not violate the dormant Commerce Clause. The court found that the statutes are not facially discriminatory, do not have a discriminatory purpose or effect, and do not favor in-state economic interests. The court also concluded that the statutes do not regulate extraterritorially because they condition a state license for conducting in-state activities on plaintiffs foregoing certain business interests, whether within or outside the state. Finally, the court determined that plaintiffs failed to demonstrate a significant or substantial burden on interstate commerce under the Pike balancing test. Therefore, the court affirmed the district court's judgment in favor of the California officials. View "Flynt v. Bonta" on Justia Law