From Pre-emption to Abrogation: Michigan Supreme Court Clarifies Statutory Impact on Common-Law Claims in Online-Gambling Disputes

Introduction

In Jacqueline Davis v. BetMGM LLC, the Michigan Supreme Court confronted a cutting-edge dispute arising out of the State’s newly authorized online-gaming industry. Jacqueline Davis, having amassed over three million dollars in apparent winnings on BetMGM’s platform, sued in circuit court when the operator refused to pay, alleging fraud, conversion, and breach of contract. BetMGM contended that the Lawful Internet Gaming Act (LIGA), MCL 432.301 et seq., vested exclusive jurisdiction in the Michigan Gaming Control Board (MGCB) and therefore “pre-empted” or barred common-law actions.

The Supreme Court reversed lower-court rulings favoring BetMGM and, in doing so, forged a new doctrinal path by:

Repudiating the terminology of “state-law pre-emption” of the common law and adopting the more precise concept of abrogation.
Holding that the LIGA does not abrogate ordinary common-law claims between a patron and a licensee unless those claims actually conflict with MGCB actions.
Clarifying that the MGCB possesses no adjudicatory power over private tort or contract disputes, and therefore circuit courts retain subject-matter jurisdiction.

Summary of the Judgment

Writing for a unanimous Court (Justice Hood not participating), Justice Brian K. Zahra held:

The proper inquiry is whether the Legislature abrogated common-law remedies, not whether it pre-empted them. Pre-emption is a doctrine relevant to conflicts between superior and inferior sovereigns (e.g., federal vs. state, or state vs. local), whereas abrogation concerns the relationship between statutes and common law.
Nothing in the LIGA reveals a “clear indication” that the Legislature meant to displace common-law claims of fraud, conversion, or breach of contract. Although the Act legalizes online gambling (thereby abrogating earlier common-law rules that refused to recognize gambling transactions), it says nothing about eliminating traditional remedies for wrongdoing within that now-lawful activity.
The Act’s “inconsistency clause” (MCL 432.304(3)) bars only laws that clash with the MGCB’s actual exercise of authority. Because the Board expressly disclaimed power to decide Ms. Davis’s dispute and took no incompatible corrective action, her lawsuit is not “inconsistent” with the Act.
Consequently, the Court of Appeals’ affirmance of summary disposition for BetMGM is reversed, and the case returns to the Wayne Circuit Court for adjudication on the merits.

Analysis

1. Precedents Cited and Their Influence

Millross v. Plum Hollow Golf Club (1987) — Previously employed “pre-emption” to describe statutory displacement of common law. Davis identifies this as the source of terminological confusion and disavows it.
Kraft v. Detroit Entertainment, LLC (2004) — Held that the Michigan Gaming Control & Revenue Act (MGCRA) pre-empted common-law misrepresentation claims regarding slot-machine odds because the MGCB had approved the machines. The Court distinguishes Kraft on two grounds: (a) the MGCB had taken specific regulatory action, and (b) the plaintiff’s theory there directly attacked that action.
Pappas v. Gaming Control Board (2003) — Addressed statutory exclusivity under the MGCRA. The lower courts relied on it, but Davis narrows its reach by showing the LIGA’s different structure.
Classical common-law gambling cases (Gregory v. Wendell, Lassen v. Karrer, Helber v. Schantz) establishing that courts would not aid gamblers before legalization. These illustrate the scope of abrogation needed—but no further—under modern statutes.

2. Legal Reasoning

Reframing the Doctrine: The Court emphasizes constitutional text (Const 1963, art 3, § 7) preserving common law unless “changed, amended or repealed.” Thus, statutory displacement equals abrogation, not pre-emption.
Legislative Intent Standard: Abrogation requires a clear indication of intent. Silence or mere comprehensiveness of a statute is insufficient.
Statutory Inconsistency Test: Even if claims are not abrogated, they may still be barred if incompatible with a specific MGCB action. This depends on whether the Board’s exercise of statutory authority confers rights or immunities that a lawsuit would undermine.
Application to the Facts: The MGCB sent letters expressly disclaiming power to decide Ms. Davis’s entitlement to winnings. Its only actions—an investigation and minor regulatory reprimands for BetMGM—created no immunity for the operator. Therefore, the suit poses no conflict.
Jurisdictional Clarification: Abrogation/pre-emption errors go to the merits, not subject-matter jurisdiction. The circuit court always had authority to hear the case.

3. Potential Impact

Terminological Reset: Michigan courts must now ask “abrogation” when evaluating statutes vs. common-law claims; “pre-emption” is reserved for state/local or federal/state disputes.
Expanded Civil Remedies for Gamblers: Patrons may pursue tort or contract claims in circuit court against licensed operators unless the MGCB has issued a conflicting ruling.
Narrower Agency Shield: Gaming (and other highly regulated) licensees cannot rely on regulatory comprehensiveness alone to dodge common-law liability—they must show an actual, incompatible agency action.
Guidance for Statutory Drafting: If the Legislature wants exclusivity, it must say so “in no uncertain terms.” Absent explicit language, common-law remedies survive.
Ripple Beyond Gaming: The reasoning may influence medical cannabis, liquor control, environmental, and other regulated arenas where defendants routinely invoke “statutory pre-emption” against private suits.

Complex Concepts Simplified

Pre-emption vs. Abrogation
• Pre-emption: A higher level of government voids conflicting laws of a lower level (e.g., federal law overriding state law).
• Abrogation: A statute alters or nullifies existing judge-made common law within the same sovereign.
MGCB’s Role — A licensing and enforcement body. It can fine, suspend, or revoke licenses and may order “corrective action,” but it is not a court and cannot award damages to patrons.
Fraud, Conversion, Breach of Contract — Traditional claims alleging deceit, wrongful control of property, and violation of a binding agreement, respectively.
In Pari Delicto — Historical doctrine refusing to help a party involved in illegal gambling. Largely obsolete after gambling legalization.
Subject-Matter Jurisdiction — A court’s power to hear a type of case. Wrongful dismissal for “lack of jurisdiction” is improper when the issue is really statutory displacement of a claim.

Conclusion

Davis v. BetMGM stands as a landmark pronouncement on the interplay between statutes and the common law in Michigan. By re-charting the vocabulary from “pre-emption” to “abrogation,” the Court has supplied a clearer map for litigants and lower courts alike. The decision reaffirms that:

Common-law remedies survive unless the Legislature unmistakably eradicates them.
Regulatory agency activity blocks private suits only when it actually conflicts with those suits.
Highly regulated industries remain accountable under ordinary tort and contract principles, absent explicit statutory exclusivity.

Going forward, parties cannot rely on the mere complexity or breadth of a regulatory scheme to extinguish traditional civil actions. They must show a specific statutory text or agency determination that truly conflicts with the claims asserted. Davis thereby reinvigorates the role of Michigan’s common law—and the circuit courts that administer it—in adapting to evolving commercial landscapes such as online gaming.