Big Fish Casino deemed “illegal gambling” by US court
Ruling could open up social casino operators to further lawsuits or regulatory restrictions
A federal appeals court has deemed Big Fish Games’ social casino product to be illegal gambling, in a ruling that could have far-reaching consequences for the sector.
The decision, handed down by the Ninth Circuit of US Court of Appeals, said virtual coins were “something of value” under Washington State law and therefore conceptually equivalent to money.
“Without virtual chips, a user is unable to play Big Fish Casino’s various games,” wrote Judge Milan D. Smith.
“Thus, if a user runs out of virtual chips and wants to continue playing Big Fish Casino, she must buy more chips to have ‘the privilege of playing the game.’ Likewise, if a user wins chips, the user wins the privilege of playing Big Fish Casino without charge. In sum, these virtual chips extend the privilege of playing Big Fish Casino.”
The case stems from a 2015 lawsuit when plaintiff Cheryl Kater sued Big Fish’s then-parent company Churchill Downs after spending $1,000 on virtual chips.
She argued that the chips represented “something of value,” under a clause in Washington state law.
A district court in Seattle ruled against Kater but that was overturned by this week’s decision.
Kater had also argued that Big Fish Casino players are able to turn a profit on their virtual chips by selling them online. While the appeals court rejected that argument because Big Fish prohibits reselling of chips, Eilers and Krejcik analyst Chris Grove noted the very existence of the mechanism was “likely material” to the case.
The case will now go back to district court, or Churchill Downs could request to have the case heard in front of a large appeals court panel.
The company is also in the process of selling the social casino firm to Australian operator Aristocrat.
The ruling could, if replicated, could open social casino firms up to similar lawsuits from other players who have lost money, or could prevent firms operating in states like Washington.
Conversely, the ruling could be a one-off thanks to the quirks of Washingotn law.
Venkat Balasubramani, an attorney at Focal PLLC told GeekWire: “The fact that it’s state law is a wrinkle because it’s not easy for Washington to reach outside its borders and enforce Washington law against foreign companies. That’s always a tricky issue in the legal arena.”
“I suspect a future court will overrule this decision,” added online poker analyst Steve Ruddock.