Grey Area of Social Online Gambling
This could be the ‘start of the end’ for social online casino and poker operators who have been making revenues from a very ‘grey’ area. Since last Thursday, four lawsuits have been filed alleging that four online social casino operators have violated Washington State Law. The operators are; Huuuge Games, DoubleDown Interactive, High 5 and Playtika. This comes on the heels of the US Court of Appeal ruling in late March which upheld the decision that Big Fish Games (a similar social online casino games operator) had violated Washington State’s online gambling laws.
The four companies offer the usual casino games but do not allow cash to be wagered, instead players are given virtual chips and when they run out of chips they may purchase more. However, the US Court of Appeals Judge Milan Smith ruled that the chips could be considered ‘things of value’ and therefore the purchase of the virtual chips should be considered gambling. This was determined to include “extension of a service, entertainment or a privilege of playing at a game or scheme without charge.” In the cases above, when players lost their virtual chips they were allowed to buy more and thus this was deemed gambling.
How it Began
This all started under the radar back in 2015 when the Kentucky based parent company of Big Fish Casino (Churchill Downs) was taken to court by a player (Cheryl Kater) who claimed that more than $1,000 had been taken from her in return for virtual chips. Lawyers for Ms Kater argued under a Washington State Statute that allows losers to recoup money from illegal gambling operators. A lower court threw out the case and many social casino operators celebrated the decision, however on appeal the decision was reversed (March 28th 2018). An application was made for this to be a Class Action Suit it could open the door for every player who has lost money at online social gambling sites to claim back their losses. We can expect many of these sites to shutter up shop.
Whilst the 9th Circuit decision interprets Washington State law, it will probably apply under other states also. PokerStars, the World’s largest online poker operator this week shut down it’s social poker games to Washington State residents.
The effect on Social Online Poker
In the USA, there are many social online poker rooms that operate in this space, for example; club style poker operator PPPoker. A simple search in the poker forum twoplustwo.com will provide all the information on how this company operates and how players from the US are finding a way around the ban on online poker. The operator provides a mobile poker platform for ‘club’ owners to operate online poker games. The club owners find players, the players buy virtual chips form the club owners who buy their stock from the operator who is located far from the US shores.
Whilst this type of operation (poker) has yet to be ruled on by the courts, the decision in Washington State will have deep repercussions. For example; every poker player who has lost an amount of money playing online at a poker cub could take their club operator to court and recoup all losses with the club operator left footing the legal bills. Without doubt the case of Ms Kater versus Churchill Downs Inc (Big Fish Casino) would be used as well as the older case of Bullseye Distributing LLC v. State Gambling Commission. Once one player is successful against a club operator, that operator could then find itself the recipient of a lawsuit similar to those handed out this week (above named social casino companies).
What About Sweepstakes Sites like Global Poker?
Without sight of online poker laws being implemented at the Federal level, US players strive to find a way to play online legally. One site that set itself up as a ‘legal’ alternative was Global Poker owned by VGW Holdings. This began in 2010 with Chumba casino (social casino site) and over the past couple of years has evolved into Global Poker an online poker room that operates a sweepstakes platform that the owners say is patent pending and legal. Here is what they say on their website:
We are pleased to announce that Global Poker is the first social poker site that offers a safe and secure cash out of winnings to players in the US. We are a leading poker site that offers a unique Sweepstakes model which has been approved by the world’s leading social media networks and payment processors. These companies have conducted their own due diligence on our $weepstakes Model.
Yet on February 13th 2017, the official representative for Global Poker (Globalpokercsdmin) on the poker forum twoplustwo said this:
The success of games like Slotomania, Doubledown Casino or Zynga Texas Hold ‘Em Poker are evidence of the large market for virtual currency social casino games. Chumba Casino and Global Poker are such virtual currency social casino games. VGW sells virtual currency (Gold Coins) for use at these games, where players play only for entertainment.
mmmm, so if Global Poker is using virtual currency, regardless of the ‘sweepstakes’ claim, does that mean they too could be deemed illegal following the Washington cases. Also, we are not too sure on the patent pending situation, in fact we are struggling to find that application, will be back soon with more news……