Michigan Supreme Court: Online Gambling Law Doesn’t Eliminate Right To Sue
Opinion Published: July 22, 2025
Court of Appeals Docket No.: 363116
Michigan Supreme Court Docket No.: 166281
Wayne Circuit Court
Author: Justice Zahra
Holding: In an unanimous opinion, the Michigan Supreme Court ruled that there is no clear evidence that the Legislature intended the Lawful Internet Gaming Act (LIGA) to eliminate common-law claims such as fraud, conversion, and breach of contract arising from a gambling dispute between a patron and an online gaming licensee. These common-law claims do not conflict with the provisions of LIGA and are therefore not barred by MCL 432.304(3). The Court of Appeals erred in concluding that LIGA preempted the plaintiff’s common-law claims. Accordingly, the judgment of the Court of Appeals, which had affirmed the circuit court’s grant of summary disposition in favor of the defendant, was reversed. The case was remanded to the circuit court for further proceedings.
Facts: In March 2021, plaintiff won more than $3 million over a six-day period by playing an online game using Defendant’s internet gambling platform. She requested a withdrawal of $100,000 of her winnings, subsequently leading to her account being suspended by Defendant for “volume of play generated.” Defendant proceeded to investigate her play history and found that the winnings had been erroneously credited to her due to the game malfunctioning. Because of these findings, Defendant refused to award Plaintiff the winnings.
In June 2021, Plaintiff filed a circuit court action claiming fraud, conversion, and breach of contract and also filed a patron dispute form with the Michigan Gaming Control Board (MGCB). In response, Defendant filed a motion for summary disposition, asserting that Plaintiff’s claims were preempted by the Lawful Internet Gaming Act (LIGA) and that the Michigan Gaming Control Board (MGCB) held exclusive jurisdiction over all online gambling disputes. While the motion was still pending, the MGCB informed Plaintiff that it was investigating her patron dispute. However, the MGCB clarified that its investigation was “not intended to make a determination on the merits of any outstanding dispute or litigation between an authorized participant and the internet gaming operator and its internet gaming platform provider,” and therefore “should not be used for such purposes.” The MGCB also stated that it had “no authority to award any money or other relief directly to an authorized participant.”
Plaintiff used this letter to oppose Defendant’s motion and further argued that her claims were not inconsistent with LIGA such that her claims would be prohibited under MCL 432.304(3), which states, ““[a] law that is inconsistent with this act does not apply to internet gaming as provided for by this act,” asserting that common-law claims are not inconsistent with LIGA. The Circuit Court deferred a decision on this motion and sought clarification from MGCB regarding its authority and jurisdiction. MGCB stated that when they find a violation of LIGA, they can direct licensees (like Defendant) to take corrective action, but MGCB does not determine the validity of these disputes and does not have authority to adjudicate such a dispute. Later, MGCB informed Defendant that it had decided to not pursue disciplinary action even though Defendant had violated administrative rules by failing to notify MGCB of the game malfunction and failing to cooperate with the investigation.
On June 29, 2022, the Circuit Court then granted Defendant’s motion for summary disposition reasoning that LIGA preempted Plaintiff's claims. The Circuit Court cited caselaw interpreting Michigan Gaming Control and Revenue ACT (MGCRA) reasoning that the LIGA, like the MGCRA, similarly established “an all-inclusive preemption clause that precludes inconsistent common-law claims.” On review, the Court of Appeals, in a split decision, affirmed the Circuit Court’s order, agreeing with the reasoning of the Circuit Court.
Plaintiff sought review from the Michigan Supreme Court which reversed the Court of Appeals in a rare unanimous decision.
Key Appellate Rulings:
Preemption is not the correct term for state statute eviscerating common law; abrogation is the correct term. The question is whether the common law was abrogated, not preempted, by the statute. For common law to be abrogated, there needs to be clear language in the statute doing so.
“Preemption” of common-law claims by state statute is a misnomer. The Court clarified, contrary to Millross v Plum Hollow Golf Club, that a state statute does not “preempt” common law. The correct principle is “abrogation.” The mere existence of a statute does not necessarily mean that the Legislature has exercised this authority. The text of LIGA directs courts to consider if common-law claims assert “[a] law that is inconsistent with [the LIGA, such that it] does not apply to internet gaming as provided for by this act.” LIGA provides the MGCB with specific powers and duties. Under the statutory scheme, the MGCB carries out its powers and responsibilities under LIGA, and licensees—such as Defendant—derive specific corresponding rights and immunities because of the MGCB’s actions. The focus of the inquiry therefore is whether Plaintiff’s claims merely conflict with the MGCB’s authority. Simply because the MGCB may take corrective measures on some matters under LIGA does not mean that the MGCB is required to take corrective measures on all matters to resolve a dispute between a patron and licensee.
LIGA clearly abrogates some aspects of common law as it legalizes online gaming. LIGA does not speak of common-law claims at all or in certain terms to abrogate them. LIGA does not even mention common law; accordingly, since it is assumed that the Legislature knows of existing common-law claims, there is no basis in LIGA that shows that the Legislature intended to abrogate claims of fraud, conversion, and breach of contract.
Abrogation occurs when common law and the statutory scheme are inconsistent with each other.
The Court of Appeals applied Kraft v Detroit Entertainment, LLC incorrectly, as Michigan common law created a different standard that what LIGA and MGCB required of licensees. Because of this inconsistency, the common law was abrogated. Defendant argued that there was an inconsistency with Rule 432.641(7) because the MGCB could have taken “any corrective action [it] considers appropriate,” but chose not to do so, therefore the MGCB ostensibly determined plaintiff was not entitled to relief. There is no inconsistency as LIGA does not obligate MGCB to take such corrective action, especially considering that the MGCB disclaims any role in resolving merits of dispute. There is no indication in the statute that the MCGB has the authority to resolve the dispute in this case. The Michigan Supreme Court ultimately agreed with Judge Feeney’s dissent from the Court of Appeals majority opinion.
