Online poker in WA state. I work in Washington's legislature and poker has been a huge issue for me obviously as I play quite a bit. As far as laws getting changed goes a lot of what people have assumed here is pretty accurate, it's just not a huge issue on the radar of a lot of legislators to be honest. I live in washington and I play. Right now, people in Washington state can play poker in card rooms and tribal casinos that have been OK’ed by the state for running the games. According to PokerAtlas, there are 74 brick-and. Few sites accept real-money poker deposits from state residents, so play money or subscription-based poker online is the best bet for WA players. If you find an online poker Washington site that accepts players, just make sure you know the law before you play.
PokerStars has blocked Washington state players from its play-money games.
The world’s largest real-money online poker site, PokerStars, has yanked its play-money online poker games from Washington State in the wake of last week’s appellate court decision in a case involving Churchill Downs’ play-money online casino site, Big Fish Casino.
However, PokerStars’ decision to depart that market may have been premature, given a statement issued by the Washington State Gambling Commission. In that statement, published on Wednesday, the WSGC disavowed any involvement in or connection to the private class-action case brought by a customer of the Big Fish site.
Here is the body of the statement provided by the WSGC:
Last Thursday, the Ninth Circuit Court of Appeals issued a published decision in Kater v. Churchill Downs Inc. (Big Fish Casino). The Court found that Big Fish Casino’s use of virtual casino chips within its games constitutes gambling under the Washington State Gambling Act, and remanded the case back to the U.S. District Court to allow the civil lawsuit to proceed forward.
Since the decision was published, we have become aware that some online social gaming websites, including Poker Stars, have proactively made the business decision to deny Washington residents access to their sites. 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. Customers with concerns should contact these websites directly.
Washington State Gambling Commission
As VSO’s Rebecca Campbell reported earlier this week, the appellate court remanded the case to the initial trial court that had initially dismissed plaintiff Cheryl Kater’s claim against Big Fish. Yet the devil is in the details. The appellate court wrote within its ruling that its decision was based on Big Fish’s practice of not only allowing players on the site to send virtual casino chips to others, but also charging a transaction fee in those same virtual chips for each such transfer.
When combined with the existence of black-market sites that helped facilitate the transfer of such chips for real-money payment, the court found that the “thing of value” test regarding Big Fish’s virtual chips has been met.
However, while many play-for-free sites allow players to send each other “gifts”, as a means of creating additional site traffic, few sites charge a transaction fee of any form for the privilege. Further, it’s still not finalized as to whether Big Fish Casino’s virtual casino chips will ultimately be judged a thing of value. That’s one of the elements that define gambling under Washington’s broad laws, but there also has to be an exchange of value or consideration. In this case, the appellate court also ruled that the simple act of playing the game was itself a “value”, if just in entertainment terms.
PokerStars’ rough history in Washington
PokerStars’ play-money poker offerings have no exchange mechanism that could be exploited in the same way as Big Fish Casino’s chips. However, Stars’ own tough history in Washington State may have played a role in the site’s decision to stop its play-money services at this time.
In early 2006, at the behest of the state’s powerful tribal-gaming interests, Washington State enacted a law that declared the playing of all forms of online gambling to be illegal. The codified penalties were extreme: A player found playing penny-ante poker online could be charged with a Class C felony, a class of violations that also included crimes such as the possession of child pornography.
Nonetheless, many international sites continued offering their real-money services to Washington residents. Those included PokerStars, and again Stars stayed open to Washington players later that year, when the US’s oppressive UIGEA (Unlawful Internet Gambling Enforcement Act) went into effect at the national level. PokerStars and a few other sites still persisted, supported by legal opinions, while the sites also watched an important legal challenge to the Washington statute banning online gambling.
When that challenge (brought by Seattle lawyer and poker player Lee Rousso) was dismissed, PokerStars finally left Washington State. However, the battle there in a case where PokerStars was seemingly banned at both the state and federal level added fuel to later “bad actor” attacks brought against PokerStars as it has attempted to re-enter, in recent years, some US states with regulated online offerings.
In this case, it appears, PokerStars just doesn’t want to carry the flag in a market where it doesn’t generate revenue anyway. Regardless of whether Washington’s own gaming regulators are worried about the legality of these free-to-play games – and they aren’t – PokerStars and these other sites are just dodging a fight with no apparent upside.
As a PokerStars spokesman told USPoker: “On Thursday, March 29, 2018, the U.S. 9th Circuit Court of Appeals ruled that, under Washington State law, free-to-play games violate state gambling regulations. As a result, The Stars Group is immediately taking actions to block play related to social gaming from Washington State. We are reviewing the rulings and ensuring that our activities are in line with state regulations. We are hopeful the law will be clarified and that when it is, we will be able to reinstate all Washington players at their current status.”
That statement regarding Washington State law is overbroad and technically inaccurate, per the WSGC’s own avoidance in the civil case. Nonetheless, PokerStars and some other social-gambling sites have done a quick disconnect, for the time being.
Casual poker players in Washington State woke up to a rude surprise earlier this month when they found out PokerStars has disabled all play-money games for users based in Washington. The basis for this decision and the court case that led to it serves as a reminder that the expansion of online poker and sports betting will not always be a smooth ride in the USA.
More concerning is the impact this ruling could have on social gaming apps in other states. Washington State’s gaming laws have always been a little hardline, but its definition of “gambling” is similar to the definition in other states. The Ninth Circuit’s ruling may make life difficult for gaming platforms across the country.
Case History
PokerStars made the decision to suspend free-play games for Washington players in response to a Ninth Circuit appeals court ruling that found an unrelated social games provider in violation of state gambling laws for its use of virtual casino chips.
The court case that led to PokerStars’ decision dates back to 2015 and involves a Washington woman who spent more than $1,000 on play-money chips on social gambling app Big Fish Casino. She later initiated a class action lawsuit against Churchill Downs Incorporated (which owns and operates Big Fish Casino) under the Recovery of Money Lost at Gambling Act.
Washington’s Recovery of Money Lost at Gambling Act allows people who lose money to an illegal gambling operation to sue to recover that money. Although Big Fish Casino does not offer real money gambling, the lawsuit contended it is an illegal gambling operation under Washington gambling law.
State law defines gambling as “staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the person’s control or influence, upon an agreement or understanding that the person or someone else will receive something of value in the event of a certain outcome.”
The woman who initiated the lawsuit argued that the chips did constitute something of value because they could be used to extend playtime and could even be exchanged for money on a secondary market.
In 2015, the US District Court for the Western District of Washington dismissed the lawsuit on the grounds that Big Fish Casino clearly stated in its terms and conditions that virtual chips had no value and could not be redeemed for cash or merchandise.
Ninth Circuit Steps In
The Ninth Circuit court of appeals stepped in and reversed the lower court’s ruling in March. According to the Ninth Circuit, Big Fish Casino’s play-money chips do actually represent “something of value” because they can be traded on a secondary market and because players must buy more virtual chips when they run out of the original free chips they are given.
Ninth Circuit Judge Milan Smith wrote in the opinion:
“In this appeal, we consider whether the virtual game platform ‘Big Fish Casino’ constitutes I illegal gambling under Washington law. Defendant-Appellee Churchill Downs, the game’s owner and operator, has made millions of dollars off of Big Fish Casino. However, despite collecting millions in revenue, Churchill Downs, like Captain Renault in Casablanca, purports to be shocked – shocked! – to find that Big Fish Casino could constitute illegal gambling. We are not. We therefore reverse the district court and hold that because Big Fish Casino’s virtual chips are a ‘thing of value,’ Big Fish Casino constitutes illegal gambling under Washington law.”
Ruling May Not Be as Crazy as It Sounds
At first glance, the Ninth Circuit’s ruling appears outrageous and even a little arrogant (see above), but a reading of the full decision reveals the Ninth Court’s decision may not be all that crazy after all. Washington State’s gambling laws and the Big Fish Casino business model also share some of the blame.
The most questionable basis for the court’s decision to define Big Fish Casino’s chips as a “thing of value” is their use in extending playtime at the casino. Players are given chips to begin with for free and additional chips can be won by completing various tasks. At no point are players required to pay money to continue playing. This part of the ruling is difficult to accept, but that’s not the sole justification for the decision.
Where I believe Big Fish Casino really went wrong and where the Ninth Circuit decision has merit is in how the casino dealt with the secondary market. Big Fish Casino itself did not offer players money for their chips, but it also did nothing to stop the secondary market. In fact, Big Fish Casino appears to have facilitated the secondary market and even profited off it.
The decision explains that Big Fish Casino users had the ability to transfer chips between one another. This allowed users to sell their casino chips on a secondary black market, and then transfer those chips to the buyer on the casino’s platform. As the decision notes, “Churchill Downs profits from such transfers because it charges a transaction fee, priced in virtual gold, for all transfers.”
This is very similar to how Valve supports the buying and selling of skins in Counter-Strike, which itself was a part of a big scandal back in 2016 related to gambling. The only real difference is Valve embraces the real-world value of its in-game items. Big Fish Casino ultimately found itself in the awkward position of attempting to convince a court that its in-game items have zero real world value despite people choosing to buy and sell those items (virtual casino chips in this case) for real money.
The Ninth Circuit has a reputation for controversy, but this particular decision isn’t as bad as it seems once you dig into the case a bit. Washington’s gambling laws make it clear that risking anything of value on an uncertain outcome is gambling, and if people were willing to trade those virtual casino chips for real money on secondary markets, it seems pretty clear that those play-money chips meet the definition of something with value.
It’s still annoying that a free social casino and PokerStars’ free money poker games are going to be shut down, but the blame resides more with the legislators who wrote Washington’s broad gaming laws and Big Fish Casino’s business model than anyone else.
Even the Washington Gambling Commission seems to be washing its hands of the ruling. In a statement posted to Twitter, the Commission went out of its way to point out that it had nothing to do with shutting down PokerStars or Big Fish Casino:
We’ve received questions about #FreePoker sites denying access to Washington residents. Please read below to learn more. Our agency did not order these sites to deny access to free poker. If you have concerns, please contact the websites directly. pic.twitter.com/idhLg95GGF
— WA Gambling Comm (@WAGambling) April 4, 2018
It should also be noted that this Ninth Circuit decision is not a ruling on the case outcome. The Ninth Circuit has simply overturned the Western District court’s dismissal. All the Ninth Circuit ruling does is allow the lawsuit to proceed. It does not mean the lawsuit will actually be successful.
But why is PokerStars shutting down play money tables?
Video Poker In Washington State
PokerStars is shutting down its play money tables in Washington because its play-money business model is quite similar to Big Fish Casino’s. Like Big Fish Casino, PokerStars gives new players free chips to start. PokerStars also allows customers to top-up their play money accounts with up 12,500 play money chips every four hours.
Also like Big Fish Casino, PokerStars offers an option for customers to purchase more play-money chips. If you’re playing on PokerStars and want to reload more frequently or would simply like to have a huge virtual bankroll, you can purchase packages of play-money chips for real money through the PokerStars interface.
A secondary market to buy and sell play money chips also began to develop around PokerStars in previous years, but the company has since disabled person-to-person transfers in order to prevent people from selling their chips to one another.
It would not be surprising to see PokerStars reopen the play money tables in Washington after making some changes to the way it does business. However, that may be a stretch because PokerStars is also moving conservatively in the United States as it hopes to become a player in the legal market as additional states legalize online gambling. That’s not to mention PokerStars’ existing operations in New Jersey.
Online Poker Legal States
PokerStars already has a complicated history in the United States and is wise to avoid any further legal controversies. With its eye on the legal real-money gambling market in the USA, keeping its play-money tables open in Washington State probably isn’t PokerStars’ top priority at the moment.