Big Fish Casino is a social gaming application that provides “freemium” online casino games.
Similar to many other providers, users are awarded free chips when they create their account and may obtain additional chips by winning games, via free chip replenishment, or by purchasing additional chips. Kater filed an appeal, and on March 28, 2018, the Ninth Circuit overturned Judge Pechman’s decision.
Big Fish Games was owned by Churchill Downs Incorporated, and subsequently sold to Aristocrat Leisure Limited earlier this year. Pechman, who was serving as the Chief Judge of the United States District Court for the Western District of Washington at the time, dismissed Ms. In sum, the Court held that the virtual chips constituted a “thing of value,” and therefore, Big Fish had conducted illegal gambling under Washington law. Notably, this decision contradicted the Washington State Gambling Commission’s prior publications regarding the legality of such social gaming in Washington.
In 2015, Cheryl Kater brought a purported class action alleging that she (and others similarly situated) should recover monies they spent on Big Fish Casino under Washington’s “Recovery of Money Lost at Gambling Act” (“RMLGA”) and Consumer Protection Act, as well as under a theory of unjust enrichment. The decision was based on Washington’s unusual statutory definition of “thing of value,” which reads: Wash. Accordingly, one week after the opinion was issued, the Commission issued a neutral news release noting that online social gaming sites, including Poker Stars, have made business decisions to block Washington residents.
The crux of the argument was that Big Fish conducted illegal gambling under Washington state law—and therefore, Ms. Edelson brought similar lawsuits in various jurisdictions (Maryland, Illinois, Ohio), that were ultimately dismissed. The Commission advised concerned customers to contact the operators directly, and expressed no opinion on the legality of such games in light of the recent opinion.
Kater should recover any monies she spent with Big Fish. Additionally, the Commission stated, “We are not a party to the civil court case, we did not testify in the case, and we did not order these sites to discontinue free online play for Washington residents.” Equally important, the Ninth Circuit’s decision was based on a dismissal, which requires that the reviewing court accept all allegations in the complaint as true.
Consequently, the Ninth Circuit opinion qualifies many of their statements with the phrase “as alleged in the complaint.” The opinion also displays several confusing statements—such as “Churchill Downs’ allegation is not included in the complaint (as the parent company of Big Fish Games in 2015, Churchill Downs is the defendant), and that Ms.
Kater “must buy more chips to have ‘the privilege of playing the game’” (chips were awarded every 30 minutes for free, and also if the patron was successful in the game).
These issues may be addressed by an panel of the Ninth Circuit, or perhaps, the United States Supreme Court.
Pursuant to a recently granted extension, Churchill Downs’ deadline to file a rehearing petition is May 11, 2018.
Since the opinion was issued, four other potential class action lawsuits have been filed to date in U. District Court in Seattle and Tacoma against social gaming operators – Huuuge Games, Double Down Interactive, High 5 Games, and Playtika.
Like Big Fish, each of the named operators offer “freemium” online casino games and of the four lawsuits, three lawsuits have the same named plaintiff and law firm.