April 26, 2018 by

WA State Classifies Free Casinos as Illegal Gambling

It would appear that, at least in the state of Washington, if you choose to play online games for free, you might actually be gambling.  The state has charged four online companies that offer free games with illegally offering gambling on their sites.  The four companies are Playtika, High 5 Games, DoubleDown Interactive, and Huuuge Games.


Playing with Chips

On these sites, players buy chips in order to play.  There is no gambling involved if we take gambling to mean betting on the result of a game, and winning or losing money based on the outcome of the game.  At these four sites, players have to buy chips to play.  The outcome of the games is irrelevant to the purchase of chips.

The state contends that the sites have been violating a clause in the state law governing gambling in which the sites sell “something of value” which, unlike when someone buys a garment or a ticket online, in terms of the gambling law, the chips are close enough to a gambling operation as to entail de facto gambling.

Big Fish Games

In 2015, a woman who had bought $1000 worth of chips to play games on Big Fish Games, sued the site.  She contended that by charging her money for the chips the site was encouraging her to spend money that she needed elsewhere in the same way that casinos, she alleged, entice gamers to deposit money that they need for other purposes.  Her lawsuit didn’t recognize efforts casinos make to control problem gambling nor did it state whether she had fun playing $1000 worth of games.

Lower Court Overturned

The suit against Big Fish Games was thrown out by a lower court but last month the US Ninth Circuit Court of Appeals sent it back to the lower court, not accepting the court’s perfunctory dismissal of the case, and ruling that Big Fish Games had, indeed, violated Washington state gambling law.

Frivolous Suit or Watershed

The suit against Big Fish Games has yet to be fully adjudicated.  It may in the end be considered a frivolous suit but it has already spawned ramifications such as the present action against the four “free” game sites.

The state of Washington is saying, not just in effect but in actual fact, that if you sell something that “resembles” outright gambling, even if your product has no gambling element involved, it may still be considered to be in violation of the state’s gambling law.

If it Looks Like a Duck

In the case of the four companies charged by the state, they offer typical casino games such as roulette, blackjack, and slots.  You play with chips that you can either get for free when the site offers them or you can spend a very few dollars and “buy” a large number of chips so you can keep going.

If you buy chips, you can never get your money back.  If you spend say $10 buying virtual chips and you “win” $50,000, you will never actually receive the money you’ve won nor will the site return your ten dollars.  In this sense, the business model of these sites seems quite far removed from actual gambling.  The sites will argue that not only do they not sell actual gambling, they don’t even sell virtual gambling since there can never be any winning or losing in real terms.

Copycat Lawsuits

There are now reports that several plaintiffs are planning to sue other free game sites in the wake of the Circuit Court ruling on the Big Fish lawsuit.  One of the plaintiffs in the action against Big Fish is said to have spent fully $20 on virtual chips.  Clearly, then, the lawsuits are driven by animus against virtual game sites rather than any actual loss of substance suffered by any player.

State Law

Although the Circuit Court is a Federal court, the law involved is a state law.  The fact that it’s a state law means that someone who lives outside Washington State but plays virtual games with virtual chips can sue the company involved under Washington law.  The availability of such redress of grievances against game sites means that in the somewhat distant future it may be possible to legally gamble online at roulette, blackjack, or slots but it would be illegal to paly virtual games with virtual chips.

Intelligence of Players

The charges filed against the four companies and the lawsuit against Big Fish Games seem to be saying that people who play games are too foolish to realize when they are gambling and when they are simply playing.

Industry Impact

Many small companies are working feverishly coming up with interesting, fun, and exciting games to play online.  If a frivolous lawsuit actually results in a financial settlement between site and plaintiff, it could also mean that the game developers are open to being sued as well.

In fact, some are already saying that any offer that is marketed as free but involves even the potential for a payment may be in violation of Washington State law.  This doesn’t mean that a slew of lawsuits will inevitably follow but it does mean that investors will be leery of investing in an enterprise that may look decidedly innocent on first glance but may be subject to a devastating lawsuit down the road.