In 2015, Kater sued Churchill Downs, the company that owned Big Fish Casino, alleging that she had lost over $1,000 worth of Big Fish Casino’s virtual chips. Alternatively, players could purchase more chips for prices ranging from $1.99 to $250. They could earn more chips through regular gameplay or as a reward for winning the casino games. Players started with a free cache of chips upon first downloading the game. The game was free to download, but players had to use in-game currency - virtual casino chips - to actually play any of the casino games. In 2013, Cheryl Kater started playing a mobile game called “Big Fish Casino” - a compilation of virtual casino games, including blackjack, poker and slot machines. While the decision represents a “first” for federal courts that have confronted this issue, Kater’s larger implications for the games industry remain unclear. Noting that the currency required to play the game-at-issue had value according to the broadly-worded statute, the court held that the game constituted illegal gambling under Washington law. Churchill Downs, the Ninth Circuit considered whether customers could attempt to recover money spent on virtual currency under Washington’s Recovery of Money Lost at Gambling Act. Court of Appeals for the Ninth Circuit concluded on March 28 that virtual currency used in mobile games can qualify as a “thing of value” for the purpose of state gambling laws - a conclusion that, until now, has been resisted by other federal courts.

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