Ristic v. Machine Zone, Inc.

Filing 37

MEMORANDUM Opinion and Order Signed by the Honorable Robert M. Dow, Jr on 9/19/2016. Mailed notice(lxs, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MIHAJLO RISTIC, individually, and on
behalf of all others similarly situated,

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Plaintiff,
v.
MACHINE ZONE, INC.,
Defendant.

Case No. 15-cv-8996
Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER
Plaintiff Mihajlo Ristic (“Ristic”) brings this class action complaint against Defendant
Machine Zone, Inc. (“Machine Zone”) for alleged violations of the Illinois Loss Recovery Act
and the Illinois Consumer Fraud and Deceptive Business Practices Act. Ristic seeks to recover
gambling

losses

and

damages

that

he

allegedly

incurred

by

playing

the

“Casino” in Machine Zone’s “Game of War” videogame app. Currently before the Court is
Machine Zone’s motion to dismiss Ristic’s First Amended Complaint for failure to state a claim
[29].

For the reasons explained below, the Court grants Machine Zone’s motion [29] and

dismisses the First Amended Complaint with prejudice and will enter a final judgment under
Rule 58. The Court also denies as moot Ristic’s motion to certify a class [4] and Machine
Zone’s motion to dismiss Ristic’s original complaint [20].
I.

Background1
Machine Zone produces a popular videogame titled “Game of War.” This videogame is

played on mobile devices and is available on both the Apple and Android platforms. [24] at ¶ 1.
Players can download the game at no initial charge. Players have the option of spending real
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For purposes of this order, the Court assumes that all well-pled allegations in Ristic’s First Amended
Complaint [24] are true.

money in order to advance through the game at a faster pace and obtain more in-depth access.
[24] at ¶ 2. This revenue model is commonly known as “free-to-play” or “freemium.” [24] at ¶
9. Due to the game’s popularity, Machine Zone has generated more than $600 million in
revenue since early 2014. [24] at ¶ 20.
The instant lawsuit focuses on the portion of the game known as the “Casino.” In this
part of the game, players are initially given a free spin on a virtual wheel. [24] at ¶ 24. The
wheel uses an animated light that circles around the slots to indicate a spin. [24] at ¶ 29. Each
“slot” on the wheel includes an in-game resource (“Prize”) that the player receives if the
animated light lands on a specific slot.
In order to spin the wheel, players click the “play” button. From that moment on, the
player has no input on the outcome of the spin. [24] at ¶ 34. There is no skill necessary to
acquire more desirable Prizes. Id. The outcome of the spin depends entirely on the algorithm
that Machine Zone has programmed into the game. [24] at ¶ 35.
Not all Prizes are of the same importance to the player’s gameplay advancement.

Ristic

alleges that some Prizes are worth more than the initial wager of $.60, while some Prizes are
worth less. [24] at ¶ 30; see also id. at ¶ 26. The awards that are allegedly more valuable than
the minimum wager range from $1.18 for 10,000 “chips” to $36.59 for 8,800 units of virtual
“gold.” [24] at ¶ 34. This valuation is derived from examining what the Prizes would cost in
virtual “gold” (which can be purchased with real money) if the player were to purchase those
items in the virtual marketplace versus obtaining them through the Casino.
Following the initial free spin, each spin costs a minimum of 5,000 “chips,” which would
cost $.60 to purchase. [24] at ¶¶ 25, 32. “Chips” can be acquired through different methods,
including through an exchange for virtual “gold.”

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Players can obtain virtual “gold” by

purchasing the virtual “gold” with real money. [24] at ¶ 20. Prices for virtual “gold” start at
$4.99 for 1,200 units and max out at $99.99 for 20,000 units. [24] at ¶ 26. The purchase of
virtual “gold”, or any in-game purchase, is completely optional and voluntary. [24] at ¶ 20. In
addition to the normal playing mode, players can spin the wheel in a “High Roller Mode.” [24]
at ¶ 28. This mode provides players with the potential to win more enticing Prizes. However, to
have access to this mode, players have to increase their wager. Id.
In early 2014, Ristic downloaded Game of War onto his smartphone. [24] at ¶ 46. After
his initial free spin in the Casino, Ristic began purchasing Chips to use for additional spins. In
total, between April 9, 2015 and October 9, 2015, Ristic spent more than $50 in Game of War
Casino wagers. [24] at ¶ 48. Ristic is unable to determine the exact amount he spent, but claims
it is likely more than $500. Id.
In Count I of his governing First Amended Complaint [24], Ristic alleges that Machine
Zone violated the Illinois Loss Recovery Act (“ILRA”) by operating a gambling device that
caused Ristic and the other members of his proposed class to lose at least $50. See [24], ¶ 67. In
Count II, Ristic alleges that Machine Zone violated the Illinois Consumer Fraud and Deceptive
Business Practices Act (“ICFA”) by engaging in unfair conduct—namely, violating Illinois’
gambling laws. Currently before the Court is Machine Zone’s motion to dismiss the First
Amended Complaint for failure to state a claim. See [29].
II.

Legal Standard
To survive a Rule 12(b)(6) motion to dismiss, a complaint first must comply with Rule

8(a) by providing “a short and plain statement of the claim showing that the pleader is entitled to
relief,” Fed. R. Civ. P. 8(a)(2), such that the defendant is given “fair notice of what the . . . claim
is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)

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(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the
complaint must be sufficient to raise the possibility of relief above the “speculative level.”
E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly,
550 U.S. at 555). “A pleading that offers ‘labels and conclusions’ or a ‘formulaic recitation of
the elements of a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Twombly, 550 U.S. at 555). However, “[s]pecific facts are not necessary; the statement
need only ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it
rests.’” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Twombly, 550 U.S. at 555) (ellipsis
in original). Dismissal for failure to state a claim under Rule 12(b)(6) is proper “when the
allegations in a complaint, however true, could not raise a claim of entitlement to relief.”
Twombly, 550 U.S. at 558. The Court reads and assesses the plausibility of a party’s complaint
as a whole. See Atkins v. City of Chicago, 631 F.3d 823, 832 (7th Cir. 2011).
III.

Analysis
A.

The Illinois Loss Recovery Act

Ristic brings his two Illinois state law claims in this Court as a purported class action
under 28 U.S.C. § 1332(d)(2). His first claim alleges a violation of the ILRA, which allows “any
person who by gambling shall lose to any other person, any sum of money or thing of value,
amounting to the sum of $50 or more” to “sue for and recover the money or other thing of value .
. . in a civil action against the winner thereof, with costs, in the circuit court.” 720 ILCS 5/288(a). To state a claim under the ILRA, Ristic must allege: (1) that he has “los[t] to any other
person, any sum of money or thing of value, amounting to the sum of $50 or more”; (2) that the
loss occurred through the act of “gambling”; and (3) that Machine Zone is the “winner” of
Ristic’s gambling loss. Id.

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Machine Zone argues that Ristic’s ILRA claim must be dismissed for three reasons: (1)
Ristic has suffered no gambling loss; (2) use of Game of War’s Casino does not constitute
“gambling”; and (3) Machine Zone is not a “winner” of gambling losses. The Court finds it
unnecessary to address Machine Zone’s first two arguments, because the third is dispositive, for
the same reasons set forth in Sonnenberg v. Amaya Group Holdings (IOM) Ltd., 810 F.3d 509,
510 (7th Cir. 2016), and Phillips v. Double Down Interactive LLC, 2016 WL 1169522 (N.D. Ill.
Mar. 25, 2016).
Ristic does not plausibly allege that Machine Zone was the “winner” of his alleged
gambling losses.

A gambling winner is the person to whom a gambling loser has lost.

Sonnenberg, 810 F.3d at 510. In Sonnenberg, the Seventh Circuit held that websites like
PokerStars.com, one of the largest virtual casinos in existence, were not “winners” under the
ILRA despite the fact that such sites clearly involve “gambling.” Sonnenberg, 810 F.3d at 511.
The court’s rationale was that such websites have “no stake in the outcome of the games played
on the site.” Id. More recently, in Phillips, Judge Chang dismissed a proposed class action
complaint against the operators of an online casino, in which players used real money to buy
virtual chips to use in the defendant’s virtual casino. 2016 WL 1169522, at *5-6. Judge Chang
concluded that the defendant was not a “winner” of the plaintiffs’ gambling losses because it
“keeps the money a player pays to buy additional chips no matter whether that player wins or
loses in the games” and therefore “there is no way for [the defendant] to lose that money.” Id. at
*6. Judge Chang rejected the plaintiffs’ argument that the defendant can be a “winner” or
“loser” in the sense that, “if a player wins additional chips then [the defendant] 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).” Id. The defendant “still

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never puts any of its own money at risk in the online games, and risking potential future sales is
not the same thing.” Id. “Because no amount of earned money ever hangs in the balance or
depends on the outcome of a game,” Judge Chang concluded, the defendant “is not a ‘winner’”
under the ILRA.
Likewise, in this case, Machine Zone keeps the money a player pays to buy additional
chips no matter what Prize the player wins in the Casino, and therefore there is no way for Ristic
to win or lose that money. If a player wins more valuable Prizes in the virtual Casino, then
Machine Zone might lose out on the chance to sell more gold and/or chips to a player who
wishes to advance more quickly in the game. And if a player wins less valuable Prizes in the
virtual Casino, then there may be a better chance of Machine Zone selling more gold and/or
chips to player in the future. But Machine Zone is not putting any of its own money at risk in the
game. Its risk of potential future sales is not the same thing, because no amount of Machine
Zone’s earned money ever depends on the outcome of the game. Phillips, 2016 WL 1169522, at
*6. In sum, the Court concludes that Ristic cannot state a claim for violation of the ILRA under
controlling circuit precedent (Sonnenberg) and thus dismisses Count I of Ristic’s First Amended
Complaint.
B.

Illinois Consumer Fraud Act

Count II of Ristic’s complaint is brought under the ICFA, “a regulatory and remedial
statute intended to protect consumers . . . against fraud, unfair methods of competition, and other
unfair and deceptive business practices.’” Windy City Metal Fabricators & Supply, Inc. v. CIT
Technology Financing Services, Inc., 536 F.3d 663, 669 (7th Cir. 2008) (quoting Robinson v.
Toyota Motor Credit Corp., 775 N.E.2d 951, 960 (Ill. 2002)). The elements of a claim for
violation of the ICFA are: (1) a deceptive or unfair act or practice by the defendant; (2) the

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defendant’s intent that the plaintiff rely on the deceptive or unfair practice; and (3) the unfair or
deceptive practice occurred during a course of conduct involving trade or commerce. Siegel v.
Shell Oil Co., 612 F.3d 932, 934 (7th Cir. 2010). A plaintiff may allege that conduct is unfair
under the ICFA without alleging that the conduct is deceptive. Id.
In this case, Ristic alleges that Machine Zone has acted unfairly, rather than deceptively.
[24] at 23-6. There are three considerations that guide an Illinois court’s determination of
whether conduct is unfair under the ICFA: (1) whether the practice offends public policy; (2)
whether it is immoral, unethical, oppressive, or unscrupulous; and (3) whether it causes
substantial injury to consumers. See Windy City Metal, 536 F.3d at 669. All three criteria do not
need to be satisfied to support a finding of unfairness. Robinson, 775 N.E.2d at 961.
The Court concludes that, taking all of Ristic’s factual allegations as true and drawing all
inferences in his favor, the First Amended Complaint does not state a plausible claim for
violation of the ICFA based on any of the three considerations. First, a practice can offend public
policy if it violated a standard of conduct contained in an existing statute or common law
doctrine that typically applies to such a situation. Boyd v. U.S. Bank, N.A., ex. rel. Sasco Aames
Mortg. Loan Trust, Series 2003-1, 787 F. Supp. 2d 747, 752 (N.D. Ill. 2011). Ristic alleges that
Machine Zone’s casino violates public policy because it violates Illinois’ gambling statutes. [24]
at 25. As explained above, Ristic does not allege a viable claim for violation of the ILRA. Nor
does Ristic allege that Machine Zone violates any other Illinois anti-gambling statutes.
Therefore, Ristic fails to state an ICFA claim based on violation of public policy. See Soto v.
Sky Union, LLC, 159 F. Supp. 3d 871, 882-83 (N.D. Ill. 2016) (online game, in which players
bought virtual gems to roll for chances to win heroes and talents, was not unlawful, and, thus,
game operator did not violate ICFA).

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Second, conduct is immoral, unethical, oppressive, or unscrupulous under Illinois law
only if it imposes a lack of meaningful choice or an unreasonable burden on its target.
Centerline Equipment Corp. v. Banner Personnel Service, Inc., 545 F. Supp. 2d 768, 780 (N.D.
Ill. 2008); see also Robinson, 775 N.E.2d at 962. Here, Ristic made a voluntary choice to
purchase virtual gold in the Game of War app. Ristic was enticed by either the enjoyment from
playing the Casino, the potential virtual resources that could be acquired, or both.

This

enticement can be alleged in all cases where consumers have made a purchase and is not
exclusive to transactions where consumers have “spent tens of thousands of dollars.” [24] at ¶
86. Ristic argues that his injuries could not “reasonably have [been] avoided given [Machine
Zone]’s use of psychological triggers that prompt regular consumers, as well as addicts, to
continue wagering for the chance to win something of great value.” [24] at 26. But the Casino is
only giving players something that has value in the game: once the player buys gold, it can only
be used in the game, whether to buy chips and play in the Casino, or to buy items in the virtual
marketplace. And while any type of addiction is unfortunate, this Court, like Judge Chang in
Phillips, does not read the ICFA to protect Ristic from his own decision to play the Casino. See
Phillips, 2016 WL 1169522, at *8 (plaintiff did not state ICFA claim where she did “not allege
that she had no choice but to submit to Double Down’s online games, nor could she,” because
plaintiff “could have picked other forms of entertainment, or even sought to play online games
on a different platform or website” and therefore “[t]here was no lack of meaningful choice”); cf.
Mason v. Mach. Zone, Inc., 140 F. Supp. 3d 457, 469 (D. Md. 2015) (“The Court does not doubt
that gambling addiction is a real phenomenon and that the allure of an elusive jackpot can be
powerful. Similarly powerful, the Court suspects, is the remorse a buyer may feel when she
realizes that she has wittingly swapped her hard-earned cash for simulated gold. The Court does

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not sit in judgment of the entertainment choices that Plaintiff and others like her have made—but
it will not allow Plaintiff to foist the consequences of those choices onto an entertainment
purveyor that, at least on the face of this Complaint, appears to have done nothing wrong.”).
Third, “a practice causes substantial injury to consumers if it causes significant harm to
the plaintiff and has the potential to cause injury to a large number of consumers.” Wilson v.
Harris N.A., 2007 WL 2608521, at *8 (N.D. Ill. Sept. 4, 2007) (internal quotation marks and
citation omitted). “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.” Phillips,
2016 WL 1169522, at *8. Here, Ristic could reasonably have avoided “losing” money in
Machine Zone’s Casino in a number of ways, including by simply buying the Prizes in Machine
Zone’s store (a practice that Ristic does not challenge), or playing the free Game of War game
without paying to advance his play more quickly. See id. (plaintiff did not state ICFA claim
where she “failed to show that she could not have reasonably avoided buying additional virtual
chips”); cf. Mason, 140 F. Supp. 3d at 465-66 (under California law, player of Game of War,
who wagered virtual currency in the game’s Casino, did not suffer economic injury attributable
to game’s producer, and thus producer did not violate California’s Unfair Competition Law,
where player purchased virtual currency with actual money at in-game store, player could not
cash out her virtual currency for actual money at any point thereafter, and player could have
spent her virtual currency on a number of things within game, including resources to hasten her
advancement in game or chips at Casino).

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IV.

Conclusion
For these reasons, the Court grants Machine Zone’s motion [20] and dismisses the First

Amended Complaint.

Since Ristic has already amended his complaint once and does not

propose any additional pleadings that might save his claims, the dismissal of the Amended
Complaint is with prejudice and the Court will enter a final judgment under Rule 58. Finally, the
Court denies as moot Ristic’s motion to certify a class [4] and Machine Zone’s motion to dismiss
Ristic’s original complaint [20].

Dated: September 19, 2016

_________________________________
Robert M. Dow, Jr.
United States District Judge

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