VIDEO GAMBLING
Hand in hand with the increase in virtual casino gaming options and an increase in participants goes a rise in consumer protection and other litigation related to these virtual environments. As players can log on and participate from anywhere, a variety of jurisdictions are hearing these cases, resulting in differing interpretations as to whether and to what extent these types of social gaming environments are permissible. 4 This article discusses appellate reviews of trial court cases discussed in the prior article, as well as the next wave of challenges to ascertain whether the use of virtual currencies purchased with real money and then lost within a closed virtual environment constitutes illegal gambling. Mason v. Machine Zone, Inc., 851 F.3d 315 (4th Cir. 2017), was a case stemming from a claim that thousands of individuals lost money participating in an unlawful “gaming device” that allows players to “spin” a virtual wheel to win virtual prizes for use within the video game Game of War: Fire Age (Game of War). In the case the federal appellate court reviewed the trial court’s determination that the class action plaintiffs failed to state a claim under Maryland’s gambling loss recovery statute. The trial court found that Game of War itself was a game of skill, while the alleged illegal activity was more akin to theater entertainment than gambling. Of particular note, the trial court recognized that the player could not “cash out” or otherwise exchange the virtual currency for real money pursuant to the game’s Terms of Service. On appeal. the Fourth Circuit, examining only the loss recovery claim, affirmed the trial court’s holding. Reaching this conclusion, the appellate court determined that neither party involved won or lost any money in the virtual casino. Instead, because Mason paid money for virtual gold that she obtained, and later exchanged that gold for unredeemable “virtual chips,” there was no money at stake, nor could she receive any money or resources redeemable for money as a result of her spin. Thus, she could not win or lose money in the Game of War virtual casino. Reaching this conclusion, the Fourth Circuit focused heavily on the term “money” as used in the Maryland Loss Recovery
Statute. The court determined the term did not encapsulate virtual resources only available and useable within Game of War, and to hold otherwise would improperly expand the statutory language. Notably, the court also rejected Mason’s contention that the existence of a secondary market for selling Game of War accounts for cash showed that “money” is at stake in the virtual casino. The court noted that Mason failed to allege that she or class members tried to sell their accounts or other virtual resources on the secondary market for money, and as such rejected the contention that the existence of the market alone demonstrated that money was won or lost. It is unclear whether such an allegation would have impacted the outcome, but it is worth noting as the law in this area continues to develop. The Northern District Court of Illinois examined a virtual casino in Phillips v. Double Down Interactive LLC, 173 F. Supp. 3d 731 (N.D. Ill. 2016). The Double Down Casino featured casino games of chance determined solely by Double Down’s computerized algorithms and was accessible via website, free downloadable application, or Facebook. Players use virtual “chips” to wager on the games. Players are granted a bundle of chips free of charge on their first login and receive free chips each day. Players are not able to “cash out” their chips with Double Down for “‘real world’ money, goods, or other items of monetary value.” Phillips filed a class-action complaint against Double Down in the Circuit Court of Cook County, Illinois, alleging that Double Down operates unlawful gambling devices, and that by “operating its virtual casino, [Double Down] has illegally profited from thousands of Illinois consumers.” Similar to the holding in Mason, the court determined that while the Double Down Casino was a gambling device, there were no “winners” or “losers”. The court reasoned that Double Down is not a winner, because it does not actively participate in the game of chance. Instead, Double Down makes its money from the purchase of chips, independent of the casino gaming activity. Phillips, on the other hand, was not a loser because she got exactly what she paid for; the chips allowed her to play
4 Numerous cases unrelated to gambling are also progressing against prominent gaming companies, particularly centered around minors and the disaffirmance of EULAs. See R.A. by & through Altes v. Epic Games, Inc., No. 5:19-CV-325-BO, 2020 WL 865420 (E.D.N.C. Feb. 20, 2020); Doe v. Epic Games, Inc., 435 F. Supp. 3d 1024 (N.D. Cal. 2020); Reeves v. Niantic, Inc., No. 21-CV-05883-VC, 2022 WL 1769119 (N.D. Cal. May 31, 2022); V.R. v. Roblox Corp., No. 22-CV-02716-MMC, 2023 WL 411347 (N.D. Cal. Jan. 25, 2023).
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IMGL MAGAZINE | JULY 2023
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