As previously reported, The Ninth Circuit Court of Appeals reversed a district court’s dismissal of a purported class action and held that a social casino game constituted illegal gambling under Washington law. According to the Court, all online or virtual gambling is illegal in Washington state. The panel held that the virtual chips extended the privilege of playing the game and fell within Wash. Rev. Code § 9.46.0285’s definition of a “thing of value.” In response to this, at least one social game company, Poker Stars, has decided to deny Washington residents access to their site.
The Washington State Gambling Commission recently issued a statement related to this case. It stated:
Since the decision was published, we have become aware that some online social gaming websites, including Poker Stars, have proactively made the business decision to deny Washington residents access to their sites. 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. Customers with concerns should contact these websites directly.
Given the uncertainty around this issue, it is possible that other social game companies may decide to temporarily deny service to Washington state residents. As we previously reported, the primary basis for this ruling was the definition of “thing of value” under Washington state law. This definition was determined to include “extension of a service, entertainment or a privilege of playing at a game or scheme without charge.” In the game at issue, if players ran out of chips they lost the right to play the game.
While the 9th Circuit decision interpreted Washington state law, arguably this definition applies under some other states as well. It is prudent for social game companies to get legal advice to assess whether this decision may impact their games in Washington and elsewhere to determine how they want to proceed.