Big Fish Games Settles Washington Lawsuit

[Integrity]

A long-running legal battle between social games publisher Big Fish Games (BFG) and two of its customers has finally come to an end.

The company and its former and current owners — Churchill Downs Inc. (CDI) and Aristocrat Technologies — finalized a $155 million agreement in May to settle a pair of class-action lawsuits.

The plaintiffs, Cheryl Kater and Manasa Thimmegowda, each spent thousands of dollars on play chips for BFG’s “free-to-play” social casino games. Both are residents of Washington and allege that BFG’s products constitute illegal gambling under state law.

Now, the ink is dry on the settlement and the legal battle is officially at its end. Its implications, however, could be felt for years to come.

The overlap between the industries isn’t limited to the demographics of their customers. Social gaming and real-money gambling have both borrowed pages from each others’ marketing strategies over the years.

Therein lies the problem, however. Social gaming companies like BFG use some of the same tactics as developers of gambling products, yet they don’t have the same regulatory oversight.

Where gambling is legal, regulators have the authority to determine what companies can and can’t do to coax players to spend more money. With social gaming, few such rules exist.

Kater and Thimmegowda argued that BFG enticed VIP players with free spins and proceeds to encourage addictive behavior. Suzie Kelly, a co-plaintiff to Kater, says she attempted to take a break from BFG’s games due to her spending but was cajoled by her host into buying more chips. She claims that ultimately she lost a total of $300,000 playing BFG’s slots.

BFG also leverages social pressure to encourage spending, according to the suit. Players can join Clubs that offer perks based on spending, and some will allegedly threaten to eject members who don’t hit certain spending targets.

Predatory though such tactics may be, there’s no law against them if the product itself isn’t gambling. For that reason, Kater’s 2015 lawsuit was originally thrown out of District Court before the Ninth Circuit Court of Appeals agreed to hear the case.

Judge Milan D. Smith ultimately agreed with Kater, ruling that BFG’s games constitute illegal gambling under Washington law. That reopened the door for her lawsuit to continue and paved the way for Thimmegowda to file one of her own in 2019.

The decision, like many, hinged on semantics. The wording of Washington’s gambling laws requires that players are risking a “thing of value.” The question, therefore, is whether the play-money chips meet that definition.

Kater argued that they do on the basis that players can transfer them to others and a secondary market exists for them. Players can arrange real-money transfers outside of the game in exchange for play chips within it.

Judge Smith rejected this argument on the basis that such arrangements are explicitly against BFG’s terms of service. However, he opined that the gameplay itself has entertainment value. The chips therefore have value because the game cannot be played without them, so wagering them still constitutes gambling.

[universal4]

The decision, like many, hinged on semantics. The wording of Washington’s gambling laws requires that players are risking a “thing of value.” The question, therefore, is whether the play-money chips meet that definition.

Kater argued that they do on the basis that players can transfer them to others and a secondary market exists for them. Players can arrange real-money transfers outside of the game in exchange for play chips within it.

Judge Smith rejected this argument on the basis that such arrangements are explicitly against BFG’s terms of service. However, he opined that the gameplay itself has entertainment value. The chips therefore have value because the game cannot be played without them, so wagering them still constitutes gambling.

I think this part here may be against Big fish games:
Kater argued that they do on the basis that players can transfer them to others and a secondary market exists for them. Players can arrange real-money transfers outside of the game in exchange for play chips within it.

Very interesting case. I predict a day where big fish may need to withdraw from the state, and I wonder what implications it may have for them in other states as well.

Rick
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