Washington Sweepstakes Laws: Where Virtual Coins Are Already Money
Washington sweepstakes laws need no dedicated statute — since Kater, virtual chips that extend play have counted as a thing of value, even chips that could not be exchanged for cash.
| Authority | Kater v. Churchill Downs Inc., No. 16-35010 (9th Cir. 28 March 2018) |
|---|---|
| Holding | Virtual chips that extend play are a “thing of value” under RCW 9.46 |
| Consequence | Churchill Downs and Aristocrat agreed in 2020 to a $155 million class settlement; Churchill Downs paid its $124 million share in March 2021 |
| Underlying law | RCW 9.46 — Gambling Act; Recovery of Money Lost at Gambling Act |
| Status | enforcement |
| What defines it | Virtual chips that extend play are a thing of value (Kater) |
| Last verified | 2026-09-13 |
The doctrine
The Ninth Circuit held that virtual chips extending the privilege of play are a thing of value under Washington law — even though the chips had no monetary value and could not be exchanged for cash. The facts were not a closed loop: the court noted that Big Fish Casino let players transfer chips to each other, which could be used to “cash out” winnings. The prize element is satisfied by the continued play itself. The case ended in a $155 million class settlement, agreed in 2020.
That makes Washington one of the strictest jurisdictions we track for social gaming. Most of the state analyses we have read turn on redemption or on cash prizes; Washington’s turns on what the player paid for.
The line, stated precisely
On our reading, Kater’s trigger is the purchase. The plaintiff bought chips. The court’s reasoning ran from that purchase — consideration — through chance to the extended play it treats as the prize. The court did not decide the free-chip question: Churchill Downs argued that free chips meant extended play cost users nothing, and the court said it would “not further address this contention” because the point was not in the complaint. So how Kater applies to a platform that never sells anything is untested. Our reading is that such a platform never enters the analysis, because the consideration element is never satisfied, and that the Recovery of Money Lost at Gambling Act — which reaches “money or anything of value” lost at illegal gambling — leaves a player who paid nothing with nothing to recover.
This is the hard constraint on every free-to-play design decision, and it is the reason Flickloot has no shop, no coin packs, and no purchase path of any kind. The day anything is sold, the model breaks — in one state, and that is one state too many.
Can you still play a sweepstakes casino in Washington?
No Washington statute names sweepstakes casinos, and the state has not needed one. In Kater, the Ninth Circuit held that virtual chips extending play were a “thing of value” under Washington’s gambling law even though they could not be exchanged for cash, and the case ended in a $155 million class settlement. RCW 4.24.070 lets a player sue to recover money or anything of value lost at illegal gambling. A casino that sells coins to Washington players carries that exposure on Kater’s reasoning, which did not turn on whether the chips could be cashed out.
A site being reachable from Washington is not evidence that it is lawful there.
Sources
- Verified United States Court of Appeals for the Ninth Circuit, Kater v. Churchill Downs Inc., No. 16-35010, filed 28 March 2018 — read 13 September 2026. The chip-transfer mechanism, the “thing of value” holding and the unaddressed free-chip argument are quoted from the opinion.
- Verified Churchill Downs Incorporated, SEC filings: press release, May 2020 (“A total of USD$155 million will be paid into a settlement fund”, $124 million from CDI, $31 million from Aristocrat) and 2021 report (“The $124.0 million settlement was paid on March 25, 2021”). A party’s own filings, not the court’s approval order.
- Verified Washington State Legislature, RCW 9.46.0285 (“thing of value”), RCW 9.46.0237 (“gambling”) and RCW 4.24.070 (recovery of money lost at gambling) — read 13 September 2026.
Flickloot carries no affiliate links and takes no operator money.