US Court Ruling Spells Trouble for Growing Social Casino Sector

A recent ruling in a United States Court of Appeals spells trouble for social casino games. A judge ruled a game by Seattle-based Big Fish Games to be a form of illegal online gambling. Though the ruling only applies to one game in the State of Washington, it could draw attention to similar games in the social casino sector.

Big Fish Casino is a free-to-play does not allow players to gamble with or play for real money. However, its chip scheme falls into the questionable territory by allowing impatient players to purchase more chips with real money when they run out.

Still, the chips have no monetary value after they are purchased, and players cannot win chips from each other and then exchange them for a cash payout. Judge Milan D. Smith said Wednesday that despite the fact the chips cannot be cashed out they still qualify as a “thing of value,” and the ability to purchase them makes the game a form of illegal online gambling under Washington law.

Big Fish Casino player Cheryl Kater launched the lawsuit in 2015 against the game’s parent company, Churchill Downs. Kater claims she spent more than $1,000 on virtual chips in the game, and that she was able to transfer them to other users and sell them for real money on secondary markets.

Kater’s argument was rejected by the Court of Appeals because the game’s terms and conditions explicitly prohibit the sale or transfer of their chips. However, Judge Smith still found the game’s chip selling mechanism to qualify as a form of illegal gambling.

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