Washington Federal Court Finds Social Casino Games Not Gambling

A class action complaint seeking reimbursement of funds paid to a social casino game provider was rejected by a federal court in the Western District of Washington in late November. The judge ruled that the funds were lost in a “illegal gambling operation.” The court concluded that the complaint failed to establish a valid claim for relief because the provider did not offer any valuable prize (as required by the definition of gambling), therefore rendering the game not in iplt20 violation of Washington law regarding “illegal gambling”. Since all of the plaintiffs’ claims relied on the determination of unlawful gaming, the court rejected the entire complaint. Furthermore, this ruling is significant as it strengthens the legality of generating revenue via social casino games, provided that specific conditions are fulfilled.

The class action lawsuit alleged that, according to Washington state law, the use of bought virtual casino chips in social casino games amounted to unlawful gambling. According to Washington’s “Recovery of Money Lost at Gambling Act” (RCW 4.24.070), individuals should have the right to reclaim the exact amount of money or the equivalent value of the item lost in the defendant’s unlawful gaming activity. In order to initiate the process of recovery, it is necessary to establish that the defendant was involved in gambling.The user’s text is a reference to a source or citation.

The defendant’s operation can be summarized by the following verifiable facts. The accused operated a virtual gaming platform that was distributed without cost. Upon completion of the download, players received a predetermined amount of complimentary virtual casino chips, which they could utilize to participate in various games such as blackjack and roulette. Users can get extra chips through winning games (at no cost), waiting for the allocation of additional chips (at no cost), or by purchasing additional chips or other virtual commodities to enhance or prolong gameplay. Furthermore, the defendant’s terms of use explicitly specified that the chips held no monetary worth and could not be converted into cash or goods, whether with the operator or other users.

The arguments in this case mostly revolved around the prize component and debated whether the social casino service grants a prize that may be considered as “something of value.” The plaintiff claimed that the virtual chips obtained in the social casino games possessed inherent worth, despite their inability to be converted into cash or merchandise. This is because the chips serve two purposes: (1) enabling users to prolong their gameplay, and (2) being capable of being sold to other users for real money on a secondary market that the defendant actively supports and gains profit from.

In regards to their first argument, which is that the chips enable users to prolong gameplay, the plaintiffs referred to the definition of “thing of value” as stated in Washington’s Gambling Act (RCW 9.46.0285). This definition encompasses anything that involves the extension of a service, entertainment, or the privilege of playing a game or scheme without any cost. The defendant successfully contended that the adoption of the definition of “thing of value” came about Betinexch as a response to businesses in Washington and other jurisdictions attempting to evade anti-gambling laws. These businesses were doing so by awarding “free plays” that could later be converted into cash, instead of directly awarding cash or prizes. Hence, the study should not center around the allocation of extended plays, but rather on whether those extended plays have the potential to ultimately lead to the distribution of cash or prizes.

The plaintiffs’ second argument, regarding the ability to sell the chips for cash on a secondary market and the defendant’s role in facilitating and profiting from this process, was examined by the court in relation to the defendant’s terms of use, which the plaintiffs had to agree to in order to play the game. The rules of usage explicitly forbid the conversion of chips into currency. More precisely, the rules of use clearly indicate that users do not possess any ownership rights over virtual items…Transferring or reselling virtual objects for commercial purposes is strictly prohibited.These items cannot be bought or sold by individuals or other companies using cash, trade, or any other form of transaction. They do not possess any monetary worth.Items are non-refundable and non-exchangeable for cash or any other physical value. The plaintiffs were seeking to obtain compensation for losses resulting from activity that clearly violated the terms of use, which they had agreed to follow. The court recognized that permitting an individual to file a lawsuit against a defendant for their own violation of a contract would contradict fundamental legal and equitable norms.

Essentially, the court determined that the social games did not meet the necessary requirement of having a prize, and as a result, they did not qualify as “illegal gambling” according to Washington law. The games and virtual chips were not considered to be “something of value” due to two reasons: (1) the extension of play awarded could never lead to the acquisition of cash or merchandise, and (2) even if there was a secondary market where users bought or sold chips, their actions directly violated the games’ terms of use.

The plaintiffs have lodged an appeal against this ruling to the 9th Circuit Court of Appeals. Nevertheless, it is crucial to acknowledge that the Washington State Gambling Commission independently arrived at the identical determination.

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