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Big Fish Casino ruled illegal in Washington

Ruling applied to social casino game could be extended more broadly as virtual currency is "a thing of value" under gambling laws

While the industry frets over new legislation covering loot boxes, it appears some games have been running afoul of existing gambling laws. As reported by Geekwire, the Ninth Circuit of U.S. Court of Appeals ruled that Big Fish Games' social casino game Big Fish Casino represented illegal gambling under the State of Washington's existing laws.

The original complaint was brought against then-Big Fish parent company Churchill Downs in 2015, by a woman who lost more than $1,000 in virtual chips playing Big Fish Casino. Under Washington law, anyone who loses "a thing of value" to an illegal gambling operation has legal ground to recover those losses.

A lower court ruled that virtual chips are not a thing of value, but the appeals court reversed that decision.

"Defendant-Appellee Churchill Downs, the game's owner and operator, has made millions of dollars off of Big Fish Casino," Judge Milan Smith wrote in the opinion. "However, despite collecting millions in revenue, Churchill Downs, like Captain Renault in Casablanca, purports to be shocked--shocked!--to find that Big Fish Casino could constitute illegal gambling. We are not. We therefore reverse the district court and hold that because Big Fish Casino's virtual chips are a 'thing of value,' Big Fish Casino constitutes illegal gambling under Washington law."

Washington law defines gambling as "risking something of value upon the outcome of a contest of chance," while the definition of a thing of value includes any token directly or indirectly exchangeable for money, property, or "the extension of a service, entertainment, or a privilege of playing a game or scheme without charge."

While the ruling notes that Big Fish Casino allows users to transfer chips to one another, creating a mechanism for people to cash out in transactions set up through secondary "black market" operations, it explicitly rejected the argument that such a mechanism meets the criteria for the chips to be things of value. The reasoning for that part of the ruling was that Big Fish's terms of use specifically prohibit the sale of virtual chips.

Instead, the reason Big Fish Casino chips qualified as things of value was how they extend users' privilege of playing the games.

"The virtual chips, as alleged in the complaint, permit a user to play the casino games inside the virtual Big Fish Casino," the appellate court ruled. "They are a credit that allows a user to place another wager or re-spin a slot machine. Without virtual chips, a user is unable to play Big Fish Casino's various games."

Washington has been particularly vigilant when it comes to gambling in and around games. In 2016, the state's Gambling Commission ordered Valve to take action against third-party gambling sites using Steam for wagering through Counter-Strike: Global Offensive, noting one site handled $1 billion in illegal skins gambling in the span of just seven months. Earlier this year, state senator Kevin Ranker introduced a bill aimed at determining whether loot boxes in games constitute gambling.

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