The Illinois Supreme Court recently tackled the question of “whether the loser of a head-to-head contest on a daily fantasy sports website may recover money lost to the winner.” On April 16, 2020, the Court held that he or she cannot. Dew-Becker v. Wu, 2020 IL 124472.
The controversy stemmed from a loss by the plaintiff (Dew-Becker) to the defendant (Wu) of 96.3 points to 221.1 in an NBA daily fantasy sports (DFS) match on the popular website FanDuel. Following the trouncing, the plaintiff sued the defendant in Cook County under section 28-8(a) of the Criminal Code of 2012, “a statutory provision which allows the loser of certain illegal bets to seek recovery from the winner.”
While the lower courts found for the defendant on the basis that the statute specified that gambling losses were recoverable in a situation where one loses “to any other person” and that FanDuel’s existence as an intermediary in the contest eliminated the direct connection necessary for recovery, the Supreme Court found for the defendant on the basis that the contest did not involve “gambling” at all. As the Supreme Court stated, “[t]he only ‘direct’ connection required under section 28-8(a) is that one person lose at gambling to another.” Speaking to statutory interpretation and the intent of the state legislature in enacting the law at issue, the Court noted that “[i]f a gambling winner’s liability could be avoided by simply having an agent assist with the gambling transaction in some way, the enforcement mechanism of the statute would essentially be negated.”
In the Court’s analysis, it becomes clear that the parties actually knew one another before participating in the fantasy duel. Indeed, the plaintiff invited the defendant to participate in the first place. The Court rejected the notion that the fantasy duel was a “game of chance” and narrowed the question before it to “whether plaintiff and defendant were engaged in a ‘bona fide contest for the determination of skill.’” Wrestling with this question, the Court specified three tests which courts have applied when determining whether the element of skill predominates a contest so as to render it exempt from gambling laws.
The first test, the Court noted, has been “adopted by the majority of courts” and is commonly referred to as the “predominant purpose test” or “predominant factor test.” Further explaining, the Court notes that “[u]nder this test, the contests in which the outcome is mathematically more likely to be determined by skill than chance are not considered gambling.” Next, the Court explored the “material element test,” noting that “[u]nder this test, a contest is considered a game of chance if the outcome depends in a material degree upon an element of chance, even if a skill is otherwise dominant.” The third and last test mentioned by the Court is the “any chance test,” which the Court explains “finds a contest to be gambling if it involves any chance whatsoever.”
After assessing the merits and validity of all three tests (of which the Court found the “any chance test” to have none), the Court opted to follow the “predominant purpose test.” The Court then perceived the next issue as “whether head-to-head DFS contests are predominately determined by the skills of the participants in using their knowledge of statistics and the relevant sport to select a fantasy team that will outperform the opponent.” After reviewing several recently published texts, the Court concluded that they are. Ultimately, the Court held that “[b]ecause the outcomes of head-to-head DFS contests are predominately skill based, we conclude that plaintiff was not engaged in ‘gambling’ with defendant as required under section 28-8(a).”
Justice Karmeier issued a lengthy dissent in which he argued that a DFS is a game of chance because, although the parties may have set the lineups, the outcome relies on the performance of athletes out of their control.
An interesting point to take away from the Court’s opinion is that it left open the question of what types of contests waged on sites like FanDuel may be considered “gambling” and therefore subject to the loss recovery provision of the statute. Notably, the Court declined to hold that the third-party intermediary nature of transactions on FanDuel necessarily remove them from the statute’s reach.
Litigation involving the question of what is considered “gambling” under the “predominant factor test” is likely to rear its head in the future as the State of Illinois moves toward more relaxed gambling regulations. Would the Court in such case consider any of the points raised by Justice Karmeier in his lively dissent or continue to rely primarily on “expert” studies? Predicting the answer at this point may simply be a “game of chance.”