Phillips v. Double Down Interactive LLC

Filing 59

MEMORANDUM Opinion and Order signed by the Honorable Edmond E. Chang. For the reasons stated in the Opinion, Defendant's motion to dismiss 24 is granted. Case dismissed with prejudice. Status hearing of 04/07/2016 is vacated. A separate AO-450 judgment shall be entered. Civil case terminated. Emailed notice(slb, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MARGO PHILLIPS,
Plaintiff,
v.
DOUBLE DOWN INTERACTIVE LLC
Defendant.

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No. 15 C 04301
Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER
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.
Compl.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

1Double

Down removed the case from state court to federal court. R. 1, Notice of
Removal. This Court has jurisdiction under 28 U.S.C. § 1332(d) (Class Action Fairness Act),
because the case meets the class-size, citizenship, and amount-in-controversy requirements.
The proposed class has more than 100 members: Double Down represents that from
January 1, 2013 to March 31, 2015 (the time period that Phillips accessed the site), nearly
18,000 people either accessed Double Down from Illinois or bought at least $50 worth of
chips from an Illinois IP address. Id. ¶ 19. The parties are also minimally diverse: Phillips
(and all other proposed class members) are Illinois citizens, whereas Double Down’s sole
member is International Game Technology, a Nevada corporation with its principal place of
business in (where else) Las Vegas, Nevada. Id. ¶¶ 21-25. Finally, the amount in
controversy is more than five million dollars. In both 2013 and 2014, the proposed class
together spent more than seven million dollars on chips. Id. ¶¶ 31-35.
2Citations to the record are noted as “R.” followed by the docket number and the
page or paragraph number.

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
plaintiff’s 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 publiclyowned 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
Facebook. 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. ¶ 30.
3Although

Federal Rule of Civil Procedure 23(c)(1) requires that certification be
decided as soon as practicable, a defendant may ask for a merits decision early on, even
before a Rule 23 decision, if the defendant is willing to forgo preclusive effect and prefers
defending against the members of the class one-by-one. Wiesmueller v. Kosobucki, 513 F.3d
784, 787 (7th Cir. 2008) (citing Cowen v. Bank United of Texas, FSB, 70 F.3d 937, 941-42
(7th Cir. 1995)). At some point, if there are so many one-by-one cases that the judicial
system (and thus the public) is better off with a class-wide decision, then a court may decide
the Rule 23 question before the merits decision, regardless of what the defense wants.
There is no reason to think that point has been reached for the claim at issue in this case.

2

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 Decl.); 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, 2016) (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 bet 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 chips
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

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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 Decl.); R. 51, Pl.’s Resp. to Def.’s Second Citation to Add’l 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 Decl. at 6 (Double
Down’s “Terms of Use,” available at http://www.doubledowncasino.com); R. 36-1,
Pl.’s Resp. Br. at 10 (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[s]” the
“transfer of Virtual Currency [that is, virtual chips]” and requires players to agree
that they will not, “[t]ransfer, sell, or re-sell” chips to any other party. R. 27-1, Exh.
A, Rebekah H. Parker Decl. 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 their 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

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“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 which 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

4In

her complaint, Phillips repeatedly relies on IGT’s 10-K and states that Double
Down “saw revenues of over $240 million from the sales of online chips” in 2014. Am.
Compl. ¶ 23 (emphasis omitted). A review of IGT’s 10-K for that same year, however,
suggests that Double Down actually had revenue of over $280 million from social gaming,
which appears to consist only of chip sales from Double Down. R. 27-1, IGT Form 10-K at 67, 36, 40.

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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.
She further alleges that she lost at least fifty dollars’ worth of chips in the last six
months. Id. (alleging that on March 7, 2015, she paid $59.00 to Double Down for 35
million chips, all of which she later lost). As will be discussed later, the fifty-dollar
allegation is a necessary threshold for the primary Illinois statute at issue.
In April 2015, Phillips filed a class-action complaint against Double Down in
the Circuit Court of Cook County, Illinois, alleging that Double Down operates
unlawful gambling devices, and that “[b]y operating its virtual casino, [Double
Down] has illegally profited from thousands of Illinois consumers.” R. 1, Exh. A,
State Court Compl. ¶ 4. Phillips brought suit on her own behalf, as well as on behalf
of “[a]ll individuals domiciled in the State of Illinois who lost $50 or more to [Double
Down] through Double Down Casino.” Id. ¶ 35. Double Down removed the case to
federal court. See supra n.1.
After the case was removed, Double Down filed a motion to dismiss all counts
in Phillips’s original complaint. R. 12. In response, Phillips filed an Amended
Complaint. R. 18, Am. Compl. In her Amended Complaint (which this Opinion will
simply call her “Complaint” going forward, for convenience’s sake), Phillips asserts
four causes of action. In Counts 1 and 2, Phillips argues that Double Down’s casino
violates the Illinois Loss Recovery Act, 720 ILCS 5/28-8(a). Id. ¶¶ 48-59, 60-70. In
Count 3, Phillips argues that Double Down’s casino violates the Illinois Consumer
Fraud and Deceptive Business Practices Act, 815 ILCS §§ 505/1 et seq. Id. ¶¶ 71-82.

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Finally, in Count 4, Phillips argues that Double Down has been unjustly enriched
through its gambling devices. Id. ¶¶ 83-87. Double Down then filed its current
motion to dismiss all counts in Phillips’s Complaint. R. 24.
II. Legal Standard
Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need
only include “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). This short and plain statement must “give
the defendant fair notice of what the claim is and the grounds upon which it rests.”
Bell Atl. v. Twombly, 550 U.S. 544, 555 (2007). The Seventh Circuit has explained
that this rule “reflects a liberal notice pleading regime, which is intended to ‘focus
litigation on the merits of a claim’ rather than on technicalities that might keep
plaintiffs out of court.” Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).
“A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to
state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of
Police Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “[W]hen ruling on a
defendant’s motion to dismiss, a judge must accept as true all of the factual
allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007);
McGowan v. Hulick, 612 F.3d 636, 637 (7th Cir. 2010) (courts accept factual
allegations as true and draw all reasonable inferences in plaintiff’s favor). A
“complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

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(quoting Twombly, 550 U.S. at 570). These allegations “must be enough to raise a
right to relief above the speculative level.” Twombly, 550 U.S. at 555. And the
allegations that are entitled to the assumption of truth are those that are factual,
rather than mere legal conclusions. Iqbal, 556 U.S. at 679; see also McCauley v. City
of Chicago, 67 F.3d 611, 616 (7th Cir. 2011).
III. Analysis
A. Counts 1 and 2: Illinois Loss Recovery Act
The first two counts of the Complaint rely on Section 28-8 of the Illinois Loss
Recovery Act. 720 ILCS 5/28-8. That section creates a cause of action to recover
gambling losses: “Any person who by gambling … lose[s] to any other person, any
sum of money or thing of value, amounting to … $50 or more … may sue for and
recover the money or other thing of value[] so lost.” 720 ILCS 5/28-8(a); Reuter v.
MasterCard Int’l, Inc., 921 N.E.2d 1205, 1208 (Ill. App. Ct. 2010). “Gambling,” in
turn, is defined as “knowingly play[ing] a game of chance or skill for money or other
thing of value.” 720 ILCS 5/28-1(a)(1). Both the statutory language and the case law
interpreting the statute make clear that a plaintiff may only recover what he or she
“lost” from the person who “won” it, and that what was lost (and correspondingly
won) must be money or some other thing of value. See People v. One Mech. Device,
142 N.E.2d 98, 100 (Ill. 1957); Sonnenberg v. Amaya Grp. Holdings (IOM) Ltd., 810
F.3d 509, 510-11 (7th Cir. 2016); Soto v. Sky Union, LLC, 2016 WL 362379, at *8
(N.D. Ill. Jan. 29, 2016).

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Double Down advances several arguments in targeting Phillips’s Illinois Loss
Recovery claims. Double Down argues that: (1) its online casino games are not
“gambling devices” under the statute, (2) it is not a “winner” under the statute, and
Phillips is not a “loser,” (3) the Complaint does not adequately plead that Phillips
suffered a loss, and (4) Counts 1 and 2 are duplicative. R. 27, Def.’s Br. at 6-15.
i. Online Casino Games as “Gambling Devices”
Double Down first argues that its online games are not “gambling device[s].”
The Illinois Loss Recovery Act defines a “gambling device” as “any clock, tape
machine, slot machine, or other machines or device for the reception of money or
other thing of value” that on “chance or skill … is staked, hazarded, bet, won or
lost.” 720 ILCS 5/28-2(a). Double Down asserts that its online games are not covered
by the Act because (a) only tangible devices, not internet games, can be gambling
devices; and (b) its virtual chips are not “things of value.” Def.’s Br. at 12-15.
In Double Down’s view, the definition of gambling device “clearly refers to a
physical, tangible object—a device that can ‘receive’ money like a slot machine,” and
not “internet games which consist of intangible software.” Id. at 14-15. Double
Down invokes a statutory-interpretation principle known as ejusdem generis, which
is a Latin term that means “of the same kind.” This principle advises that “[w]here
general words follow specific words in a statutory enumeration, the general words
are construed to embrace only those objects similar in nature to th[e] objects
[specified].” Wash. State Dep’t of Social & Health Servs. v. Guardianship Estate of
Keffeler, 537 U.S. 371, 384 (2003); Yates v. United States, 135 S. Ct. 1074, 1086

9

(2015). According to Double Down, the specific examples enumerated in the
statute—“clock, tape machine, [and] slot machine”—are all “tangible machines,”
Def.’s Br. at 15, and as a result, any “other machine[] or device,” 720 ILCS 5/28-2(a),
must also be a tangible thing, rather than an internet–based app.
Double Down’s reliance on the similar-nature interpretive principle does not
work for a variety of reasons. To start, Double Down does not explain why it chose
tangibility as the common thread that ties together a clock, a tape machine, and a
slot machine. In other words, for this list of gambling devices, why is the “nature” in
the “similar in nature” interpretive principle, Yates, 135 S. Ct. at 1086, tangibility?
If you were to ask a gambler what all of those items have in common, the gambler
would probably say, “They’re all machines or devices used for gambling.” Not likely
that the gambler would blurt out, “They’re all tangible!” And consider this too: what
if you played the beloved Sesame Street game, “One of These Things Is Not Like the
Others,” using the clock, tape machine, slot machine, and a slot machine displayed
on a phone or computer. Ask the gambler to pick the one thing that is not like the
other three. The gambler might very well first categorize together the two slotmachine entrants, and then try to figure out whether the clock or tape machine is
more like the two types of slot machines.5 The point is that the similar-nature
interpretive principle does not yield “tangibility” as the common thread.

5Double

Down also does not explain what a “clock” or “tape machine” is in the
context of gambling devices. The Court did not find an answer on “tape machine.” But the
reference to “clock” is likely a “stock clock.” See State v. Grimes, 52 N.W. 42, 42 (Minn.
1892) (a “machine … wound up with a crank; that when wound up, weights suspended on
cords furnished the motive power; that it had a spout, in which cards were placed, each
card marked so as to represent a particular kind of railroad or other stock; that the

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Another crucial point is that, although Illinois courts have yet to specifically
address whether internet games are gambling devices, the Illinois Supreme Court
has taken a broad view of what is a “gambling device.” E.g., People v. McDonald,
186 N.E.2d 303, 305 (Ill. 1962) (rejecting the contention that the term “gambling
device” includes only “machines or mechanical devices,” and instead holding that
“[u]nder the broad meanings which attach to the term ‘gambling device,’” the term
also encompasses “inanimate,” “nonmechanical” objects such as “punch boards,
poker games, tips and tickets”). When interpreting the term in McDonald, the
Illinois Supreme Court focused not on the type of device, but rather on whether the
device was clearly “intended to be used as [a] device[ ] upon which money [could] be
hazarded, won or lost.” Id. at 306. Applying this line of reasoning to this case, there
is no reason why the term “gambling device” could not also be viewed as embracing
supposedly “intangible” online casino games if those games are clearly intended to
be used as a way for consumers to bet, win, or lose money. “The law is not required
to be blind to, or ineffectual against, the ceaseless efforts and ingenuity of persons
to circumvent the Gambling Device Act [the Illinois Loss Recovery Act’s
predecessor].” People v. One Mach. Known as “Circus Days”, 163 N.E.2d 223, 228

‘customer’ would ‘invest’ a sum of money in some ‘stock’ represented by a particular card by
purchasing a ticket from the owner of the machine, that the ‘clock’ was then set in motion
by pulling a cord, when two of the cards in the spout would, by the motion of the machine,
be dropped or forced out of the spout through two slots, one of the cards dropping through
the upper and the other through the lower slot. If the card representing the ‘stock’ in which
the ‘customer’ had invested was forced through the upper slot, then the stock ‘had risen,’
and he had won a sum equal to one half of the amount he had invested; while, if the card
dropped through the lower slot, the stock had fallen,’ and the customer had lost a like
amount. In short, the customer was betting on which way the clock would force a particular
card, and this depended entirely on chance.”).

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(Ill. App. 1960). So, although it is true that the internet is not a tangible device in
the exact same way that a stand-alone slot machine is, the internet is also not some
amorphous thing, and Double Down’s app can qualify as a “device” used for
gambling. No doubt the internet was not on the minds of the Illinois state
legislature (or anyone else’s minds, for that matter) when it passed the Illinois Loss
Recovery Act (the predecessor statute was passed in 1895), but the words used in
the statute are broad enough to cover Double Down’s app.
Double Down next argues that its online games are not “gambling devices”
because its virtual chips are not “thing[s] of value.” Def.’s Br. at 12. Double Down
contends that because players are only able to wager chips on the games, which are
not “thing[s] of value,” its online games cannot be considered “gambling devices.” Id.
(Remember, the Illinois Loss Recovery Act defines a gambling device as: “any clock,
tape machine, slot machine, or other machines or device for the reception of money
or other thing of value” that on “chance or skill … is staked, hazarded, bet, won or
lost.” 720 ILCS 5/28-2(a) (emphasis added).) Phillips disagrees, arguing that Double
Down’s chips are things of value. R. 36-1, Pl.’s Resp. Br. at 6-9. She points to the
fact that the chips can be purchased by players for a discrete sum, that chips grant
players the right to place additional wagers on casino games without spending any
additional money, that Double Down makes millions of dollars on chip sales each
year, and that players can buy and sell their accounts (and with it their chips) on
the secondary market. Id. at 7-9; Am. Compl. ¶¶ 52, 64.

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Phillips’s argument has surface appeal. When the players buy the chips,
obviously the chips have a monetary value, and obviously Double Down has made
money (indeed, millions of dollars) on chip sales over the past several years. At the
end of the day, however, the Court need not decide whether the chips are “things of
value,” because the real problem for Phillips is that Double Down’s online casino
games do not have a “loser” or a “winner,” as those terms are used in the Illinois
Loss Recovery Act. That is the next issue up for discussion.
ii. No “Winner” or “Loser”
The statutory language of Section 5/28-8 of the Illinois Loss Recovery Act, as
well as the case law, make clear that in order for a plaintiff to recover under the
Act, there must be a “winner.” It is against the winner that a plaintiff is entitled to
recover his or her gambling losses. 720 ILCS 5/28-8 (“Any person who by gambling
shall lose to any other person, any sum of money or thing of value, … may sue for
and recover the money or other thing of value, so lost … in a civil action against the
winner … .” (emphasis added)); Pearce v. Foote, 113 Ill. 228, 237-38 (1885)
(addressing whether defendant was a winner under predecessor statute); Reuter v.
Mastercard Int’l, Inc., 921 N.E.2d 1205, 1214-16 (Ill. App. Ct. 2010); Ranney v.
Flinn, 60 Ill. App. 104, 104 (Ill. App. Ct. 1894) (“It is the winner … who is liable to
respond to the loser … .”). Under the statute, a winner is “a person whom a player
had played with and lost to.” Sonnenberg v. Amaya Grp. Hldgs. (IOM) Ltd., 810
F.3d 509, 510 (7th Cir. 2016). To be a winner, a person must have “a direct stake in

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the outcome of the gambling.” Fahrner v. Tiltware LLC, 2015 WL 1379347, at *7
(S.D. Ill. Mar. 24, 2015) (citing Pearce v. Foote, 113 Ill. 228 (Ill. 1885)).
Here, Double Down is not a “winner.” Double Down never directly
participated in the games, Reuter, 921 N.E.2d at 1215, nor did it have a direct stake
in the outcome of any games. Because Double Down keeps the money a player pays
to buy additional chips no matter whether that player wins or loses in the games,
that money is never put at risk. Simply put, once the chips are paid for, there is no
way for Double Down to lose that money. See Langone v. Kaiser, 2013 WL 5567857,
at *6-7 (N.D. Ill. Oct. 9, 2013) (holding that the operator of website that charged
entry fees was not a winner under the Illinois Loss Recovery Act because the
operator never put its fees at risk); cf. Pearce v. Foote, 113 Ill. 228, 239 (Ill. 1885)
(holding that brokers were winners because they participated in the risk of the
trade). Of course, it is true—as Phillips suggests—that if a player wins additional
chips, then Double Down might lose out on the chance to sell more chips to that
player, assuming that the player would even choose to buy more chips if he or she
ran out (which that player might opt not to do). Pl.’s Resp. Br. at 15. But that
tangential risk does not change the result here. See Reuter, 921 N.E.2d at 1214
(holding that credit card companies were not winners under the statute even though
the amount charged to a credit card, and the amount of interest collected by the
credit card company, rested in part on the outcome of a cardholder’s online
gambling). Double Down still never puts any of its own money at risk in the online
games, and risking potential future sales is not the same thing. Because no amount

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of earned money ever hangs in the balance or depends on the outcome of a game,
Double Down is not a “winner” under the Illinois Loss Recovery Act. Reuter, 921
N.E.2d at 1215; see also Manning v. Creative Headquarters, No. 1:11-CV-02203, at 3
(N.D. Ill. Mar. 30, 2012) (Docket Entry 83) (holding in qui tam action that a penny
auction site was not a winner under the Illinois Loss Recovery Act (or under similar
statutes) because auction participants paid entry and bidding fees regardless of the
outcome of an auction).
To resist this conclusion, Phillips also argues that Double Down directly
participates in the wagers because of “the way Double Down realizes its revenue.”
Pl.’s Resp. Br. at 13. Phillips contends that because Double Down “refuses to assign
revenue generated from the sale of the Chips [in its annual public filings] until a
user actually wagers and loses them in the Casino games,” Double Down directly
participates in each game—and thus wins when Phillips loses. Id. at 13-14. Phillips,
however, misunderstands what it means to defer revenue. IGT (Double Down’s
parent company) notes in its 10-K that its “revenues” from Double Down “include
deferral adjustments based on the estimated period of service or chip consumption.”
IGT Form 10-K at 7. All this means, however, is that Double Down does not
recognize its chip revenue immediately upon sale; rather, it recognizes revenue once
the chips are “estimated” to have been consumed. Id. at 64 (“Revenues from player
purchases are recognized ratably over the estimated average service period in which
the chips are consumed based on historical data analysis.”). The fact that for
accounting purposes Double Down does not immediately recognize the sale of its

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chips in the fiscal period in which a player paid for those chips does not change the
fact that Double Down still never faces the possibility of losing that money. No
matter when Double Down accounts for that money, it is Double Down’s to keep.
Even if a player never wagers the chips he or she bought, Double Down still keeps
the money paid to buy the chips. There is no “winning” money or anything of value
for Double Down when the chips are used.
Finally, Phillips is likewise not a “loser” under the statute. When Phillips
bought more chips, she was in essence buying the right to continue playing the
games. And Phillips got to do just that: she got to use those chips to continue
playing Double Down’s online casino games. In other words, she did not “lose” the
value of those chips. See, e.g., Humphrey v. Viacom, Inc., 2007 WL 1797648, at *10
(D.N.J. June 20, 2007) (dismissing qui tam claim under the Illinois Loss Recovery
Act (among others), in part because, “in paying for the right to participate in the
[fantasy sports] leagues and receive Defendants’ services, participants simply do not
‘lose’ anything, and certainly suffer no cognizable ‘gambling’ loss[.]”). In the absence
of a winner or a loser, Counts 1 and 2 must fail.
iii. Pleading of Amount of Loss
Double Down separately contends that Phillips failed to adequately plead the
amount of loss. For the sake of completeness, the Court will address this argument.
Assuming (contrary to what the Court just held above) for the moment that using
the chips should be considered a “loss” under the Illinois Loss Recovery Act, Phillips
would have adequately pled the amount of loss. To plead the amount of loss under

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Section 5/28-8(a), a plaintiff must “identify the winner, the amount lost to that
winner, and the date of the loss.” Langone, 2013 WL 5567587, at *4, 8 n.5; see also
Sonnenberg v. Oldford Grp. Ltd., 2015 WL 1379505, at *5 (S.D. Ill. Mar. 24, 2015),
aff’d 810 F.3d 509 (7th Cir. 2016). A plaintiff must also plead that the loss was more
than fifty dollars and that the loss happened within six months of the filing of the
complaint. 720 ILCS 5/28-8(a); Holland v. Swain, 94 Ill. 154, 157 (Ill. 1905) (an
action to recover money lost gambling must be brought within six months); Gibb v.
Dominy, 154 Ill. App. 74, 78-79 (Ill. App. Ct. 1910).
Here, if using the chips were considered a loss under the Act, Phillips
adequately pled the details of the loss. In her Complaint, Phillips alleges that she
lost at least $1,000 between January 2013 and April 2015 to Double Down.6 Am.
Compl. ¶ 39. She further alleges that on March 7, 2015, she purchased $59 worth of
chips (or 35 million chips) from Double Down, and that she then lost those chips. Id.
That is enough to adequately allege that Phillips lost at least $50 to Double Down
within the six months leading up to the filing of her original complaint in April
2015. Whether Phillips is entitled to recover for losses that occurred more than six
months before the filing of her complaint is a separate question, and one that
relates to Double Down’s final argument below.
iv. Duplicative Counts
Lastly, Double Down argues that Counts 1 and 2 of the Complaint are
duplicative. Def.’s Br. at 17. But this argument, like the prior one, misses the mark.

6Phillips

filed her initial complaint in state court on April 10, 2015. See R. 1, Notice
of Removal, Exh. 1 at 2. She filed her First Amended Complaint on July 2, 2015. R. 18.

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It is Phillips’s contention that Double Down’s Casino offers “continuous gambling
sessions,” and that unlike “previous gambling devices where[ ] consumers gamble
and exit after some time to conclude one gambling transaction,” a session at Double
Down Casino lasts until a player cashes out their account (presumably, on the
secondary market). Am. Compl. ¶¶ 33, 55; Pl.’s Resp. Br. at 19. Under this theory,
which is detailed in Count 1 of the Complaint, Phillips contends that she should be
entitled to recover losses extending beyond the six-month period immediately
preceding the filing of this action. More specifically, Phillips argues that she should
be entitled to recover losses dating all the way back to January 2013 (the date she
started playing Double Down’s casino games), because her play has constituted a
single, continuous gambling session. Am. Compl. ¶¶ 48-59; Pl.’s Resp. Br. at 19.
In Count 2, by contrast, Phillips bases her claim on the theory she is instead
entitled to recover only those losses that occurred in the six months immediately
preceding the filing of this action, and nothing more. Am. Compl. ¶¶ 60-70; Pl.’s
Resp. Br. at 19. Phillips raises this claim in the alternative, something she clearly
states in her complaint. Am. Compl. ¶¶ 60-70 (Second Cause of Action labeled as
being “In the Alternative to the First Cause of Action”). Phillips had every right to
raise this claim in the alternative. Carlson v. Nielsen, 2014 WL 4771669, at *3 (N.D.
Ill. Sept. 24, 2014) (a party “may set out 2 or more statements of a claim or defense
alternatively or hypothetically, either in a single count or defense or in separate
ones”); Alper v. Altheimer & Gray, 257 F.3d 680, 687 (7th Cir. 2001) (explaining that
at the motion to dismiss stage, a “[plaintiff] is entitled to plead in the alternative,

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even if the pleadings are inconsistent”); Fed. R. Civ. P. 8(d)(2). Counts 1 and 2,
which are based on different legal theories, are not duplicative. Still, as discussed
earlier, Counts 1 and 2 must be dismissed, because Double Down is not a winner,
nor is Phillips a loser under the Illinois Loss Recovery Act.
B. Count 3: Illinois Consumer Fraud and Deceptive Practices Act
In Count 3, Phillips contends that Double Down’s gambling devices violate
the Illinois Consumer Fraud and Deceptive Practices Act (“ICFA”), 815 ILCS 505/1
et seq. Phillips alleges that Double Down treated her “unfair[ly]” and that Double
Down’s games “offend[ ] Illinois’[s] public policy against unlawful gambling and
[are] … unethical, oppressive, [and] unscrupulous.” Am. Compl. ¶ 78.
Illinois’s Consumer Fraud Act is designed “to protect consumers from unfair
methods of competition and other unfair and deceptive business practices.” Batson
v. Live Entm’t, Inc., 746 F.3d 827, 830 (7th Cir. 2014) (citing Robinson v. Toyota
Motor Credit Corp., 775 N.E.2d 951, 960 (Ill. 2002)). “A plaintiff is entitled to
recover under [the Act] when there is unfair or deceptive conduct.” Siegel v. Shell
Oil Co., 612 F.3d 932, 935 (7th Cir. 2010); Robinson, 775 N.E.2d at 960. Here,
Phillips alleges only that Double Down engaged in “unfair” conduct; Phillips does
not allege that Double Down engaged in deceptive conduct.
In determining whether particular conduct is unfair, the Court considers
whether the conduct: “(1) offends public policy; (2) is immoral, unethical, oppressive,
or unscrupulous; or (3) causes substantial injury to consumers.” Batson, 746 F.3d at
830; Robinson, 775 N.E.2d at 961. A plaintiff need not satisfy all three criteria to

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support a finding of unfairness. Robinson, 775 N.E.2d at 961. Rather, “[a] practice
may be unfair because of the degree to which it meets one of the criteria or because
to a lesser extent it meets all three.” Id. So, Phillips’s claim must satisfy at least one
of these criteria to be valid. Batson, 746 F.3d at 830.
Phillips first argues that Double Down’s games offend Illinois’s public policy
against unlawful and unregulated gambling. A practice offends Illinois public policy
if it is contrary to what “is found in [Illinois’s] constitution, its statutes, and its
judicial decisions.” Reed v. Farmers Ins. Grp., 720 N.E.2d 1052, 1057 (Ill. 1999). As
discussed above, Illinois does prohibit the use of gambling devices under its Loss
Recovery Act, but, as the Court has already explained, Double Down’s online games
do not violate that statute. Because Phillips’s claim here is premised on Double
Down’s games violating that statute, which they do not, Double Down’s games do
not violate Illinois’s public policy.
Phillips next argues that Double Down’s games are “immoral” and “otherwise
unethical, oppressive, [and] unscrupulous,” because they are designed to encourage
illegal gambling and to exploit the psychological triggers associated with gambling
and addiction. Am. Compl. ¶ 78. To satisfy this criterion, a plaintiff must establish
that the defendant’s conduct is “so oppressive [that it] leave[s] the consumer with
little alternative except to submit to it.” Robinson, 775 N.E.2d at 961; Batson, 746
F.3d at 833. This criterion is not satisfied, however, “if a consumer can avoid the
defendant’s practice by seeking an alternative elsewhere.” Batson, 746 F.3d at 833;
see also Robinson, 775 N.E.2d at 961; Siegel, 612 F.3d at 936. Here, Phillips does

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not allege that she had no choice but to submit to Double Down’s online games, nor
could she. Phillips could have picked other forms of entertainment, or even sought
to play online games on a different platform or website. There was no lack of
meaningful choice here. And while gambling may be considered “immoral,” Pl.’s
Resp. Br. at 21 (citing Modernistic Candies v. Fed. Trade Comm’n, 145 F.2d 454,
455 (7th Cir. 1944)), it has already been established that Double Down’s games do
not have a gambling winner or loser under Illinois law. Phillips has failed to satisfy
this criterion.
Phillips also contends that Double Down’s conduct of inducing consumers to
buy chips caused substantial injury. She argues that she personally suffered a
substantial economic injury of more than $1,000 as a result of Double Down’s
conduct. Am. Compl. ¶¶ 39, 79; Pl.’s Resp. Br. at 21. She further alleges that when
her injuries are combined with the losses suffered by the “public as a whole,” “they
are undeniably substantial.” Pl.’s Resp. Br. at 21. A practice causes substantial
injury “if the injury is (1) substantial; (2) not outweighed by any countervailing
benefits to consumers or competition that the practice produces; and (3) one that
consumers themselves could not reasonably have avoided.” Batson, 746 F.3d at 834.
Here, Phillips has failed to show that she could not have reasonably avoided buying
additional virtual chips. She could have avoided the cost of buying more chips by
either opting for alternative entertainment when she ran out of chips, or by
stopping play and waiting a day for an additional allotment of free chips. E.g.,
Kremers v. Coca-Cola Co., 712 F. Supp. 2d 759, 773 (S.D. Ill. 2010) (holding that the

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injuries caused by defendant’s trade practices, if any, is one that plaintiff could have
easily avoided by simply drinking a different soft drink or beverage). The ICFA
claim in Count 3 must be dismissed.
C. Count 4: Unjust Enrichment
Finally, in Count 4, Phillips raises an unjust enrichment claim. In Illinois, to
state a claim based on a theory of unjust enrichment, “a plaintiff must allege that
the defendant has unjustly retained a benefit to the plaintiff’s detriment, and that
defendant’s retention of the benefit violates the fundamental principles of justice,
equity, and good conscience.” HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc.,
545 N.E.2d 672, 679 (Ill. 1989); see also Cleary v. Philip Morris Inc., 656 F.3d 511,
516 (7th Cir. 2011); Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir. 2010). But
where “an unjust enrichment claim rests on the same improper conduct alleged in
another claim, then the unjust enrichment [claim] will be tied to th[at] related claim
[and] … will stand or fall with the related claim.” Cleary, 656 F.3d at 517; see also
Martis v. Grinnell Mut. Reinsurance Co., 905 N.E.2d 920, 928 (Ill. App. Ct. 2009) (a
claim of unjust enrichment “is not a separate cause of action that, standing alone,
will justify an action for recovery”).
Here, Phillips’s unjust enrichment claim is based on the same allegedly
improper conduct that her Illinois Loss Recovery Act claims (Counts 1 and 2) and
Illinois Consumer Fraud and Deceptive Practices Act claim (Count 3) are based on,
namely, that Double Down Casino allegedly operates unlawful gambling devices.
But those claims have been rejected. Because Phillips’s unjust enrichment claim

22

rests on the same conduct alleged in Phillips’s first three counts—all of which have
already been found invalid—Phillips’s unjust enrichment claim must also be
dismissed. Cleary, 656 F.3d at 517.
IV. Conclusion
For the reasons discussed above, Double Down’s motion to dismiss [R. 24] is
granted. Phillips has already amended her complaint once, and does not propose
any other potential amendments, so the dismissal is with prejudice.

ENTERED:

s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: March 25, 2016

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