Wednesday, March 28, 2018

Kater v. Churchill Downs Inc. (9th Cir. - March 28, 2018)

Today's Ninth Circuit opinion may turn a lot of things into illegal gambling -- at least under Washington state law.

Judge Smith's opinion holds that the computer application "Big Fish Casino" entails illegal gambling because you get an initial purchase of "chips" but then, if you run out of chips, have to buy more.  He says that means that you're "gambling" under Washington law because the chips are "things of value" -- i.e., have value because they let you keep playing the game.

Importantly, the panel holds that this is gambling not because some people sell these chips on a secondary market (e.g., the chips have "actual" cash value).  The Ninth Circuit says, in a footnote, that this argument doesn't work, as the terms of service preclude such secondary sales.

It's instead the fact that these chips can be used to obtain additional game play that makes them items of value.  Hence it's gambling.  Hence a user can get back all the money s/he spent on the game.

Okay.  I can see why the Ninth Circuit's so inclined.  Particularly with respect to a casino game.

But it seems to me that today's opinion makes a ton of computer games illegal.  To take but one example, my mother likes to play "Candy Crush" -- a very popular game.  You only get a certain number of "lives" per hour.  Then you've got to wait a while until you get new lives.  But you can defeat a level and then you won't lose a life.  So you can "win" at this "gambling game" and get a "life" that has "value".  And you can purchase new lives as well.

Under today's opinion, that seems to clearly entail illegal gambling under Washington law.  As would a plethora of other applications that limit your game play via similar measures; lives, chips, power, whatever.  A huge volume of games.

I'm sure my mother would be surprised to learn that she's illegally gambling almost every day.  This opinion seems pretty darn broad.

Even though the users of Big Fish Casino -- and a plethora of other games -- may well be excited to learn that they can now probably get all their money back.

At least in Washington.  As well as in any other state with a similarly-worded statute.