Gaming industry launches lobbying effort to shield smartphone games from Washington gambling laws

Game On WA co-chair Kristina Hudson. (Photo via Game On WA)

Gaming industry and civic leaders in Washington state are launching a new lobbying organization today, part of a broader effort to exempt smartphone games from local gambling laws.

Game On WA is launching in response to a federal court decision last year that cast uncertainty on the legal status of smartphone games with in-app purchases in Washington state. The organization is led by former government officials and tech leaders. Its goal is to persuade the state legislature, gambling commission, and public that Washington gambling laws should not apply to so-called “social games.”

The gaming industry has flourished in Washington over the past decade, led by companies like Microsoft, Valve, and Big Fish Games. For years, the Washington State Gambling Commission did not enforce gambling laws on social games. But a 2018 federal court decision broke with that tradition, leaving the casual gaming industry in “legal limbo” in Washington state, according to Game On WA.

A federal judge from the Ninth Circuit Court of Appeals ruled that a Big Fish Casino game constitutes illegal online gambling under Washington state law. Big Fish Casino is a series of games like slots, blackjack, and roulette that use virtual chips. The chips have no monetary value themselves, but players can only play as long as they have chips. If they run out, they have to wait until the game offers more free chips or they can buy more chips and jump back in.

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Several other lawsuits have been filed in the wake of the Big Fish decision, challenging the legality of social games in Washington.

The decision could have big implications for mobile gaming. Casual games, like the ones available in Big Fish’s casino, are big business. One of the lawsuits filed in Washington cites a figure from JP Morgan saying that these free “games of chance generated over $3.8 billion in worldwide revenue,” in 2016, with expected growth of 10 percent annually.

Game on WA co-chair Kristina Hudson worries the decision will create a “geofence” around Washington state that casual game developers will be reluctant to cross.

“With the legal status of online games in limbo the companies are likely going to protect themselves by geofencing Washington state, so our players will no longer have access to the games that they have been playing,” she said.

Hudson is executive director of OneRedmond, an organization that acts as the Redmond, Wash., economic development arm and chamber of commerce. Before joining OneRedmond she spent 15 years at the Washington Interactive Network, a nonprofit that works to grow the gaming and interactive media industries in the state.

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Game on WA is co-chaired by former Washington Governor Gary Locke and Michael Schutzler, CEO of the Washington Technology Industry Association. They hope to convince the legislature to pass a bill that addresses the question of social games in the state.

But that isn’t likely to happen next session, according to Heather Songer, public information officer for the Washington State Gambling Commission. She said the legislature will be focused on sports gambling and other priorities during the upcoming short session.

Washington lawmakers are expected to consider a bill that would allow sports betting at tribal casinos following a Supreme Court decision that paved the way for states. Most forms of gambling are illegal in Washington state except at licensed casinos on tribal land.

Last year, Big Fish petitioned the gambling commission to issue an order stating that social gaming is not considered gambling under state.

“Our commissioners heard arguments from both sides at a public meeting,” Songer said. “They decided not to enter an order. The main reason for their decision was not wanting to interfere with ongoing civil litigation.”

Game On WA has a handful of member companies from the gaming industry and is planning to grow following the launch. The group hopes that raising awareness of social games’ tenuous position in Washington will encourage lawmakers and regulators to address the issue.

Without a legal fix, Hudson worries that social games companies will move out of Washington, taking jobs with them. There are more than 20,000 people working in the social games industry in the state, according to Game On WA.

“This has caused uncertainty in the industry,” Hudson said. “Not only does this uncertainty make it difficult to retain and grow our local companies, but it also makes it difficult to recruit new companies to the region.”

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