US social gamer Big Fish rattled by Washington ruling

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After a Washington judge ruled that Big Fish’s social gaming constitutes a form of illegal gambling, sites have already begun blocking players, and preparing for litigations from other expedient consumers. James Gatto, partner at Sheppard, Mullin, Richter & Hampton, explains how Washington law enabled the ruling, and whether other states are open to the same conclusion.

After Cheryl Kater spent $1,000 on virtual chips with Big Fish’s social casino, she filed a lawsuit with a Washington district courts in 2015 claiming that as the chips had “value” that could be lost, it should be considered gambling, and ultimately that she should get her money back.

The district court dismissed her claim, but was later picked up a Ninth Circuit Court of Appeals, which agreed last month that Big Fish was indeed operating illegal gambling.

“Without virtual chips, a user is unable to play Big Fish Casino’s various games. Thus, if a user runs out of virtual chips and wants to continue playing Big Fish Casino, she must buy more chips to have ‘the privilege of playing the game’.” Judge Milan D. Smith deliberated.

“In sum, these virtual chips extend the privilege of playing Big Fish Casino.”

While the ruling applies only the letter of the law in Washington, it could lead to further reimbursements to other expedient consumers within the state, and might yet be adopted by other states with similar wordings – New York and New Jersey among them.

PokerStars was quick to “proactively” block Washington players from accessing its social games. But a number of copycat suits have already been filed by players looking to get their money back, against DoubleDown, Playtika and others.

The combined impact could be significant for the US, social gaming’s largest, market.

“There is tremendous growth in the popularity of these games and they are generating a lot of revenue,” notes James Gatto partner at Washington law firm, Sheppard, Mullin, Richter & Hampton.

“A number of companies are using the online version to draw players into the land- based operations and are integrating loyalty programs to do so. There appears to be an opportunity to cross market.”

The sector is expected to surpass $17bn in global revenues by next year.

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