An app with a casino game does not violate state gambling laws, a federal court judge has ruled.
Mia Mason sued Machine Zone Inc. alleging that a feature in the company’s Game of War: Fire Age application ran afoul of both California and Maryland laws. Although the game is free, players can purchase virtual “gold” with real money at rates from $4.99 for 1,200 pieces to $99.99 for 20,000 pieces. The game also features a “casino” where players can spin a wheel and exchange their “gold” for the chance to win items that can be used only for in-game play. This “illegal game of chance” enticed users to wager hundreds of dollars in order to win items, Mason claimed.
Having lost more than $100 wagering at the casino over the course of a year, Mason filed suit in Maryland federal court. She alleged the casino is an unlawful “slot machine or device” under California law and that the defendant further violated the Unfair Competition Law by operating the casino. She also included claims under Maryland law.
But U.S. District Court Judge James K. Bredar had limited patience for the lawsuit. “Plaintiff charges that Defendant trampled real and important rights and interests of hers, wrongfully and unlawfully, in an alternative, virtual world created by an electronic game,” he wrote. “But a careful probe beneath the surface reveals a hodgepodge of hollow claims lacking allegations of real-world harms or injuries. Perceived unfairness in the operation of outcome of a game, where there are no real-world losses, harms, or injuries does not and cannot give rise to the award of a private monetary remedy by a real-world court.”
While at first glance the casino might seem to meet the requirements of California’s Penal Code Section 330b(d) as a “machine, apparatus, or device” operation “by any other means” that grants the user a “thing of value” by “reason of any element of hazard or chance,” the court agreed with the defendant that the casino function was actually software downloaded to a user’s mobile device.
California courts have recognized systems that include elements of both software and hardware, Judge Bredar noted, but not software alone. “Indeed, the most natural reading of the phrase ‘machine, apparatus, or device’ calls to mind a piece of equipment, just as the phrase ‘slot machine’ calls to mind a physical terminal with movable parts and flashing lights,” he wrote. Based on this natural reading of the statute, he found the game’s casino function was not covered by the law.
Even if the court were to find the casino function fell under the rubric of Section 330b, an exception would allow the defendant to avoid liability, the court said. Section 330b(f) states: “Pinball and other amusement machines or devices, which are predominantly games of skill, whether affording the opportunity of additional chances or free plays or not, are not included” in the provisions creating liability.
The game at issue was not the casino function, the court said—it wasGame of War. “Plaintiff proffers no authority for the proposition that the Court may excise one particular aspect of an integrated strategy game and evaluate that aspect in isolation,” Judge Bredar wrote. “Because GoW’s Casino function is not a ‘slot machine or device,’ and because the game—properly viewed as a whole—is predominantly a game of skill,GoW does not violate Section 330b.”
Not only did the plaintiff lack standing to bring suit under California’s UCL, the court said she was unable to allege an economic injury attributable to the defendant’s conduct. Plaintiff did not “lose” her $100 by wagering it in the casino, the court explained. Instead, she acquired virtual gold by exchanging “her real-world currency for a nontransferable, revocable license to use virtual currency for entertainment purposes. At the moment of that antecedent transaction, Plaintiff’s ‘loss,’ if any, was complete: then and there she had swapped something of value (real money) for something of whimsy (pretend ‘gold’).”
The remainder of Mason’s claims failed as well. Maryland’s prohibition on gaming devices similarly required a loss, which the plaintiff could not establish. The court emphasized that the gold or casino prizes have no real-dollar value and the game’s Terms of Service provide that they can never be redeemed for “real-world” money or goods, with a prohibition on a secondary market of virtual gold.
“[N]one of the prizes on offer in the GoW Casino have any freestanding value apart from their contribution to gameplay,” Judge Bredar said. “Plaintiff’s theory, if taken seriously, would place an eventual factfinder in the unenviable position of pricing the conversion from virtual gold and chips to virtual wood and rock. Such a whimsical undertaking may spark the imaginations of children and ardent game enthusiasts, but it can have no place in federal court.”
To read the order in Mason v. Machine Zone, click here.
Why it matters: While Judge Bredar acknowledged that “gambling addiction is a real phenomenon and that the allure of an elusive jackpot can be powerful,” he did not hesitate to express his disapproval of the lawsuit. “The Court does not sit in judgment of the entertainment choices that Plaintiff and others like her have made—but it will not allow Plaintiff to foist the consequences of those choices onto an entertainment purveyor that, at least on the face of this Complaint, appears to have done nothing wrong,” the court wrote. “The Court is keenly aware that evolving technologies generate novel questions and that these questions sometimes give rise to thorny cases. This case, however, is at bottom a simple one. The laws of California and Maryland do not trifle with play money, and so Plaintiff’s Complaint must be dismissed.”