PokerStars has withdrawn from Washington State following a federal court ruling against Big Fish Games and its social casino product, Big Fish Casino.
According to a press release from the Washington State Gambling Commission, PokerStars has closed off its free play games in a bid to stay in line with a March 28 Court of Appeals decision.
In addition to announcing that PokerStars’ social gaming platform has ceased operations within the state, the Gambling Commission stated that it wasn’t party to the decision-making process.
“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,” reads the April 4 press release.
‘Free’ Chips Have Value
In a statement to USPoker.com, a spokesperson for PokerStars confirmed the Washington withdrawal and said that the company was “reviewing” the legal situation. According to Judge Milan D. Smith of the Ninth Circuit Court of Appeals, free play casino chips represent a “thing of value” under Washington State Revenue Code § 9.46.0285.
Smith’s ruling pertains to a 2015 case between Cheryl Kater and social casino gaming site Big Fish Casino. During the original case heard by Washington Western District Court, Kater’s legal team argued that the “free” chips weren’t actually free and therefore contributed to a form of gambling.
Kater’s argument was that she should be entitled to her money back ($1,000), because the games breached local gambling laws. The decision was thrown out by Judge Marsha J. Pechman, but a subsequent appeal reversed that decision.
For Judge Smith, the fact that a customer has to buy more chips if they run out of the initial distribution means that they have some monetary value. Conversely, if a player wins chips, they have the luxury of playing without charge, which again reinforces the value of a “free” play casino chip.
Based on this, Smith concluded that even though the chips don’t have any inherent in-game value, they are worth something in reality. The upshot of this decision is that Big Fish Casino was found to be in breach of Washington State gaming laws.
PokerStars Looks at Big Picture
For PokerStars, this was enough for it to invoke its jurisdiction review policy. As outlined by the operator’s terms and conditions, PokerStars and its third-party legal experts have the right to terminate operations pending a review of any business risks on a “market-by-market” basis.
The move would appear to be a prudent one, as PokerStars has come under fire from Washington State officials in the past. Despite withdrawing its real money games from the state in 2010, the poker operator was active there for four years after SSB 6613 was passed.
Prefaced with the title “Prohibiting Internet Gambling,” the 2006 bill altered the language of RCW 9.46.240, which set out the rules for transmitting or receiving gambling information. The law had previously covered telephone, telegraph, semaphore (flag communications such as those used at NASCAR races), and radio communications, but was updated to include the internet.
A failed legal challenge forced PokerStars — and then Full Tilt — to exit the state in 2010, but not before possible breaches of the federal Illegal Gambling Business Act had occurred. Although neither operator was charged with running illegal gambling operations in Washington State, they were both classed as illegal gambling businesses, per the law.
“Illegal gambling business means a gambling business which is a violation of the law of a State or political subdivision in which it is conducted,” the federal statute reads.
Since 2010, efforts to legalize online poker in Washington have often brought up the notion of bad actors, namely, companies that have previously violated US gaming laws. PokerStars has been cited as a prime example of a bad actor and, therefore, one that should be excluded from receiving a license, if state regulations were to pass.
In light of this, the decision to remove all free play games in the state, pending a legal review, demonstrates that PokerStars is prudently any possibility of further jeopardizing its position in the US market.