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Kater v. Churchill Downs Inc.

United States Court of Appeals, Ninth Circuit

March 28, 2018

Cheryl Kater, individually and on behalf of all others similarly situated, Plaintiff-Appellant,
v.
Churchill Downs Incorporated, a Kentucky corporation, Defendant-Appellee.

          Argued and Submitted February 6, 2018 Seattle, Washington

          Appeal from the United States District Court for the Western District of Washington D.C. No. 2:15-cv-00612-MJP Marsha J. Pechman, Senior District Judge, Presiding

         COUNSEL

          Alexander G. Tievsky (argued), Roger Perlstadt, and Ryan D. Andrews, Edelson PC, Chicago, Illinois, for Plaintiff-Appellant.

          Matthew R. Berry (argued), Susman Godfrey L.L.P, Seattle, Washington; Robert Rivera, Susman Godfrey L.L.P., Houston, Texas; for Defendant-Appellee.

          Before: MILAN D. SMITH, JR. and MARY H. MURGUIA, Circuit Judges, and EDUARDO C. ROBRENO, [*] District Judge.

         SUMMARY[**]

         Washington Gambling Law

         The panel reversed the district court's dismissal of a purported class action against Churchill Downs alleging violations of Washington's Recovery of Money Lost at Gambling Act and Consumer Protection Act, and unjust enrichment; and held that Churchill Downs' virtual game platform "Big Fish Casino" constituted illegal gambling under Washington law.

         All online or virtual gambling is illegal in Washington. Big Fish Casino's virtual chips have no monetary value and could not be exchanged for cash, but Big Fish Casino did contain a mechanism for transferring chips between users, which could be used to "cash out" winnings.

         The panel held that the virtual chips extended the privilege of playing Big Fish Casino, and fell within Wash. Rev. Code § 9.46.0285's definition of a "thing of value." The panel concluded that Big Fish Casino fell within Washington's definition of an illegal gambling game. See Wash. Rev. Code § 9.46.0237.

         The panel held that plaintiff Cheryl Kater stated a cause of action under Recovery of Money Lost at Gambling Act where she alleged that she lost over $1, 000 worth of virtual chips while playing Big Fish Casino, and she could recover the value of those lost chips from Churchill Downs, as proprietor of Big Fish Casino, pursuant to Wash. Rev. Stat. § 4.24.070.

          OPINION

          Milan D. Smith, Jr., Judge

         In this appeal, we consider whether the virtual game platform "Big Fish Casino" constitutes 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.

         FACTUAL AND ...


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