Operating Social Casino-Style Applications Continues To Be Costly In Washington State

In the latest string of gambling cases involving social casino-style apps out of Washington state, a federal jury has awarded a class of players nearly $25 million for injuries arising from the use of two of High 5 Game's mobile applications: High 5 Casino and High 5 Vegas.

The award comes after a U.S. District Court judge ruled last June that the two apps amount to illegal gambling under Washington law. Continuing a line of cases that started with the Ninth Circuit's landmark decision in Kater v. Churchill Downs Inc., and the resultant $155 million settlement, the ruling stems from the specific statutory definition of "gambling" in Washington state, which broadly define "things of value" to include an extension of play. Following the Kater decision, courts applying Washington law have relied on this broad definition to reject defendants' assertions that the activities do not fall within the purview of the state's gambling statutes because the virtual currencies used in these social casino-style apps do not constitute "things of value," as they are only usable within the particular platform or gameplay and cannot be exchanged for real currency.

Putting it into Practice: Businesses operating social casino-style applications or platforms should strongly consider excluding players from Washington state, as Kater and its progeny suggest that the statutory interpretation of the gambling statutes applied to such apps appears well-settled. Additionally, businesses should be aware that there are at least a handful of other states with similar "extension of play" language in their gambling statutes, and while the case law may not be as well-developed in these states, there is a risk that courts in those jurisdictions will take a similar position to that of Washington.

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