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Cameron Turner and Adrienne Arlan examined a recent opinion from the Illinois Supreme Court on what was expected to be a trivial gambling case, but could now decide what does and does not constitute illegal gambling in Illinois.
Please see below for the article, originally published in Sports Litigation Alert.
Decision Involving Fantasy Sports Wager Could Define What Does and Does Not Constitute Illegal Gambling in Illinois
“You don’t have to make a Supreme Court case out of it!” We have all heard or used that expression when someone has made a big deal out of a seemingly trivial matter. Recently, though, the Illinois Supreme Court issued its opinion in Dew-Becker v. Wu1, a seemingly minor dispute over a $100 fantasy basketball wager with potentially major implications on what constitutes illegal gambling in Illinois.
On April 16, 2020, the Court held that Plaintiff Colin Dew-Becker, the loser of a head-to-head contest through a fantasy league website (FanDuel), may not recover money lost to contest winner and Defendant Andrew Wu, because the contest did not meet the legal definition of gambling under Section 5/28-(8) of the Illinois Criminal Code. Plaintiff argued that he was entitled to regain his losses to Defendant under Section 5/28-8(a) of the Code, which allows a person who loses $50.00 or more to another from gambling activity to recover the amount lost. Though the Court maintained that there was “no question that [the parties] were ‘actual contestants who had before them a possible ‘prize,’ ‘award,’ or ‘compensation…’” the issue for the Illinois Supreme Court was instead whether the parties were engaged in a “contest for the determination of skill,”2 which constitutes an exception to the definition of gambling under Section 5/28-8(b).
The Court answered its question and rejected Plaintiff’s argument through its application of the “predominant purpose test” outlined in Joker Club, LLC v. Hardin, 183 N.C. App. 92, 643 S.E.2d 626 (N.C. Ct. App. 2007)3. Under this test, contests in which the outcome is more likely to be determined by mathematics or skill than chance are not considered gambling activities. It requires, in other words, that the element of chance outweigh the exercise of skill or judgment in the contest to constitute gambling. The Court defended its use of this test because it provides, in its opinion, more clarity than tests that rely too heavily on subjective definitions of chance or materiality when it comes to determining what qualifies as gambling.
When applied to the instant case, the “predominant purpose test” defeated Dew-Becker’s claim, at least according to the majority. Despite the Court’s admission that all competition is at least partially determined by elements of chance, it maintained that fantasy league contests are games of skill, and thus do not qualify as gambling under Illinois law. This, the Court reasoned, is because said contests are “predominately determined by the participants’ knowledge of statistics and the relevant sport, which allows them to select a team that will outperform other opponents.”4 Put simply, fantasy sports league contests rely too heavily on the expertise of the players and not enough on the chance or luck attributed to them through the contest.
Justice Karmeier, in his dissent, raised two main issues with the Court’s holding. The first concerned the way in which the Court applied the “predominant purpose test”, and the second concerns the Court’s reliance on the scientific studies that served as a determining factor in its holding that online fantasy league contests are games of skill. Justice Karmeier first argued that while the Court’s
decision to use the “predominant purpose test” was proper, its understanding and application of it was incorrect. In defending his position, Karmeier noted that “[a] review of [other] jurisdictions [following the test] clarifies that, to be a contest of skill, the participant’s efforts or skill must control the final result, not just one part of the larger scheme.”5
Had the Court taken this approach in applying the test, Karmeier maintained, it would have found that online fantasy league contests are games of chance versus skill. Since “[t]he critical distinction between a game of chance and a game of skill is the participant’s ability to overcome chance with superior skill[,]”6 the Court would have needed to establish that the element of chance inherent in the game could be conclusively eliminated by, instead of outweighed by, the skills of the players. Because both of these factors must necessarily coexist for any game to occur, however, it follows that no level of skill can determine or control how an athlete may preform, or how other immediate factors may influence the outcome of a game through chance. Justice Karmeier’s second issue with the majority was the Court’s reliance on “scientific studies” that were not found in the record, or in either party’s briefs, that were nonetheless used to make the determination that skill is the predominate factor in online fantasy league contests. The Court’s failure to verify the studies, in other words, through citations or cross-examination of the studies’ authors, could raise serious hearsay and witness credibility issues in the future.
The failure to establish the credibility of these studies as valid, and therefore as valid evidence that online fantasy league contests are games of skill, therefore, simply failed to hit the procedural mark required of the parties and the Court in applying the test in the first place. Having now officially adopted the “predominant purpose” test to determine what constitutes illegal gambling, the debate is now open, not just in courtrooms but also in bars and at dinner tables, as to when wagering activities are predominantly skill- or chance-based. One can easily think of many debatable examples. Is an office March Madness pool predominantly a game of chance or skill? One can research the teams playing in March Madness, evaluate their strengths and weaknesses and their potential matchups, and make picks based on that. One need not even do that much to make picks based on seeding and point spreads and could still probably fare better than someone who just flips a coin and forms a roster that way. Or, how about blackjack? Anyone who can do basic math and count to 21 can play blackjack, but certainly someone who studies the strategy of the game in different scenarios will fare better over an extended time period than someone who has not. Blackjack, of course, is designed such that the casino always fares better than the players over the long haul. Is blackjack a game of skill or chance, according to the Illinois Supreme Court?
As noted by Justice Karmeier, the majority in Dew-Becker relies heavily on peer-reviewed studies (that, as he points out, were not even part of the record) to reach its conclusion that fantasy basketball is predominantly a game of skill. The opinion suggests that, going forward, this will be the operative consideration for evaluating the “predominant purpose test”. In the case of March Madness brackets, where humans are pitted against other humans, one would expect that peer-reviewed studies would indeed demonstrate that participants who study teams and match-ups or really do anything more than just pick randomly or based on criteria unrelated to team performance will generally perform better. Peer-reviewed studies would also certainly demonstrate that a human who understands basic blackjack strategies will fare better than another human who does not adhere to those strategies. However, no peer-reviewed study would ever find that even the best blackjack player can beat the house, without cheating, over an extended time period. And that highlights another key component of the Dew-Becker decision. In order to evaluate whether a game is one of skill or chance, the principal consideration is who the opponents are. In the case of fantasy basketball, humans are matched against humans. In March Madness office pools, humans are matched against humans. In blackjack, however, humans are not matched against the other players at their table, but ultimately the casino, which will always win over time.
The Illinois Supreme Court’s decision in Dew-Becker would certainly suggest that money exchanged in fantasy sports leagues will stay with the winners and many other personal and informal “wagers” will likely meet the “predominant purpose test” in matchups between human participants.
Beyond the legal implications of the opinion, though, the opinion revives the age-old debate about whether an activity is a game or sport and the extent to which luck and skill play a role.
1 See generally, Dew-Becker v. Wu, 2020 IL 124472, 2020 Ill. LEXIS 389.
2 Id. at 10.
3 Id.
4 Id. at 12.
5 Id. at 18, 19.
6[2] Id. at 21.