PokerStars Blocks Play Money Games in Washington State, Federal Judgment Unnerves Social Gaming Industry

PokerStars has blocked free-to-play games in Washington State. According to the State Gambling Commission, the online poker giant is one of several providers of “freemium” social casino-style games that opted to withdraw services to state residents last week, following a federal court judgment on the legality of the Big Fish social casino app.

On March 28, the Ninth Circuit US Court of appeals reversed a district court’s dismissal of a lawsuit that accused Big Fish of providing illegal gambling under Washington State law.

Judge Milan D. Smith of the Ninth Circuit US Court of Appeals ruled that the virtual play-money chips used in Big Fish’s Casino could be regarded as being “something of value,” and therefore constituted a gambling “stake.” All forms of online gambling are illegal in the state.

Big Fish to Fry

“Since the decision was published, we have become aware that some online social gaming websites, including PokerStars, have proactively made the business decision to deny Washington residents access to their sites,” said the Gambling Commission in an official statement.

“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,” the Commission’s statement continued. “Customers with concerns should contact these websites directly.”

The initial court case was brought by a Cheryl Kater, a former Big Fish player, who said she had spent over $1,000 on virtual chips while playing the casino games. She claimed the games violated several Washington State statutes, including the Recovery of Money Lost at Gambling Act (RMLGA) and the Washington Consumer Protection Act.

Value Judgment

Since Washington law defines gambling as “risking something of value on the outcome of a contest of chance or a future contingent event not under the person’s control or influence to receive something of value in the event of a certain outcome,” the case hinged on whether virtual play chips were a thing of value.

While the chips have no direct monetary worth, the judge favored a broad definition, ruling that “value” could be the “extension of a service, entertainment or a privilege of playing at a game or scheme without charge.”

It’s a ruling that will send a chill down the spine of the multibillion-dollar social casino industry. While the judgment related specifically to Washington State law, that state’s definition of gambling is generally accepted, and the phrase “something of value” is found in gaming laws across America.

Kentucky-based Churchill Downs, which owns Big Fish Casino, is expected to appeal.