brazil alexander t s b for the plaintiff appellant cheryl cater like to take three minutes for a bottle if i can to try to help you so this is a straightforward statutory interpretation case and i think it's most effective to jump right in to examine the washington statute here so i don't think there's any question that washington law allows plaintiffs to recoup gambling losses from the proprietor of a gambling game and so the only outstanding question is whether these casino chips in churchill downs is online casino game are things of value under washington law right because of what you bet is a thing of value and what you win in the game is a thing of value then the game is gambling and you can recoup your losses so the statute here it's r c w nine four six zero two eight five gives three categories of things of value two of the categories are relevant here i'd like to focus on the third category which is any form of credit or promise directly or indirectly contemplating transfer of money or property of any interest there in or involving extension of a service entertainment or privilege of playing at a game or scheme without charge so the casino chips here they meet that definition let me ask questions  the fact that the statute was drafted in one nine hundred seventy three before we had computers or the internet make this application of the statute just inherently ambiguous i don't think so your honor and the reason i don't think that is even before computers people have been doing this for a long time the bull's eye case which is from the seventy's a really good example of this in the bulls eye case you could get free points to play this a game that looks a lot like this it's not of the internet but it's a it's a machine and the washington court of appeal said there look even though they give away the in that game they were called play points right even though they give away these play points that have no particular very value even though they give them away for free if you win more then you get to continue playing this game you can also pay them you can put a dollar into the machine and that's enough to call it a thing of value so i don't think you know the the online nature of this specifically makes sure that we know that it's illegal because in washington state all online gambling is illegal so there's no sort of question about that the word illegals in the statute almost be illegal for you to recover but is there a way to read the statute so that things of value can be defined to mean either any money or property or any token object or article exchangeable for either money or property or any form of credit or promise contemplating transfer of money or property or involving the extension of a service entertainment or privilege of playing the game or scheme without charge modifying what is exchangeable instead of what is the thing of value modifying i think that that would make this i think that would make language in the statute duplicative so the reason we have it's parsed out in our brief to be these three categories separated by the destructive or the reason for that is because the second one has exchangeable for money or property and then the third section has contemplating transfer of money or property it would seem strange to me to to have exchangeable for money or property modified by something that says contemplating transfer of money or property right you those you can't both of those things together don't they don't they don't make sense read in conjunction i think they have to be read as three different categories or contemplating a transfer of money or property would start would be  sort of describing any form of credit or promise right so the last category we have is any form of credit or promise directly or in indirectly and then the rest of those the rest of those definitions there modify it so it's either any form of credit or promise the commonplace transfer of money or property or it's any form of credit or promise involving extension of a service entertainment or a privilege of playing at a game i think that's the only way you can read it because there's no other now that involving extension of a service entertainment could modify and that's how the court the washington court of appeals read it in bull's eye they said look you know these these credits in this game extend you the privilege of playing this game without charge and that's enough you know we don't have to look at at playing without charge yes i mean i would base that in the statute as opposed to in the right in the case of that but yes case interprets it that way yes that's certainly our best argument and i should add that that that case interprets it in terms of consideration much of the focus on the district court's opinion and in my friends briefing was on the what they call the prize element there they're one in the same here but the statute refers to them as the same way this thing of value and i should add that the statute doesn't say the word  prize in it right it says receive something of value in the event of a certain outcome and so that's the same idea as the consideration in bull's eye it's it's is the thing a thing of value and and as your honor said in that third definition it are certainly our best argument that it is and that in this case that is essentially what happened right yes that is absolutely what happens you you know they give you you know they throw you a few free chips to  start you know a lot of discussion about free to play bull's eye also discussed that just because they throw you a few free ones doesn't mean they're not things of value you run out of those real fast and then you want to continue to play go by so yeah you got to you have to have to put a lot of money our client our allegation is two hundred dollars she spent significantly more than that orders of magnitude more people get addicted to this and you know they make they make an awful lot of money i think millions and millions of to where when your client paid that would be paid through the app would go to churchill downs as those records show that i mean that the complaint alleges that churchill downs ok got the money you know we don't know specifically where it goes i know that i know that apple probably takes a cut but as far as the allegations are concerned it goes to th underlying it what its purpose was of them to make money that's its purpose to make money we don't we don't have any any allegations about the development we know that churchill you know big fish was an independent company churchill downs bought it  is addictive look the president is a gambling company right they run they run times the casinos they know how this works and so certainly we allege that that's that that's what it's that's what it's for there any evidence in the record indicating how much money  millions and millions of dollars you know we haven't put in any evidence of anything because this is on a motion to dismiss but it's certain nobody is nobody's contested that's more than five million dollars that's that's what i know you know what i also know is that him to show that in fact it wasn't just free chips there was an understanding that money would be made you were going to buy more chips and that money would be paid to churchill downs and they would make a lot of money in this case where the five million dollars absolutely honor and they sold it you know i think we  much they bought it for and they put in their moving papers how much they sold it for and they made hundreds of millions of dollars when they decided to get out of this business and sell this game it's very very profitable you know there i don't think there can be there can be any question about that know this is a huge money making enterprise for them you know as i said millions of dollars individuals spending tens of thousands of dollars on these chips because because it is addictive unquestionably at about the terms that that doesn't happen and they don't make any money on it are allegations are that they in fact facilitate transferring these chips between people and that they make money doing it that they take a cut when you transfer chips between people so they know about it they make money on it it's a wink and a nudge arrangement but it's not necessary you know to even reach that question as far as our case is concerned because what you're asking is are these things a thing of value under the statue look there's lots of things that have value that are  illegal or contractually illegal to transfer drugs are great examples drugs have no value they all belong to the government right but they are there's a street value of trucks saying why are you dropping the contractual argument that was then what  language people sell these things thereby leaving the country in which you're saying don't go there we don't need to write we're not it's only dropping that argument i mean it's just if the court has concerns about it there's an easy way around it which is which is that that third portion of the statute but you know if the court is more interested in the in that sort of second portion of the statute and the the exchangeable for money argument then then the answer is yes the terms of service say that no it doesn't matter because all that it's demonstrating you know it's not that she tried to use the secondary market or anything like that it's just demonstrating that they have value that churchill downs has contemplated that these things can be transferred and be exchanged for money that's that's the that's the kind of key point with that i'd also like to address the materials from the state gambling commission as there was a motion or a request for beautiful noticed those documents should inform the court's decision here i don't believe we ruled on that no it gambling commission we're talking about the same documents yes the pamphlet in a slide deck it would absolutely be relevant if the gambling commission had issued any kind of interpretive statement which in washington has to be marked as an interpretive statement has to be the opinion of the commission that's not what this is there's a slide deck that was presented at a meeting that the gambling commission commit members of the commission openly questioned the conclusions of it there was no vote to adopt it this isn't the opinion of the of the of the appointed board of washington it's a few employees at a commission at the commission who gave a presentation as to what they thought the pamphlet in the lobby to you know it's just it's just a pamphlet that's been drawn up by the employees and it misstates the law frankly that was presented at district court the it was raised in the district court and the district judge did not consider it and i think that that that was a correct decision by the district court and this court should shouldn't look at that either it's good morning may please the court mabury the churchill downs there's been no court in the nation that's held that free to play games like big fish casino is illegal gambling and it's not for lack of trying here plaintiffs counsel has filed these types of cases across the nation and not only have they been universally rejected in doing so those court made clear it's not even a close case and the same is true here now at the outset i'd like to address something that they've been arguing for and that a liberal construction should apply here to these aspects of the gambling act and so important to point out that there is a liberal construction clause in the gambling act but it's very narrow and it does not apply here that clause applied is a deliberate according to the plaintiff were dealing with acts that are not authorized by the gambling act therefore you go back to the default rule that's the rule of lenity and strict construction but let me start with the language of the statute here and the plaintiff focused on this thing of value definition and i'll explain why the plaintiff is wrong on that but the court need not even go there because it should start with the recovery of money lost a gambling act and the plaintiff loses in the district court should be affirmed for very simple the plaintiff did not lose money now if you look at exactly what she is alleging here and her claim to paragraph fifty nine and she says that she lost quote money and she's seeking the recovery of the monies quote that she lost she's not seeking in the operative paragraph you know a thing of value and to get back a thing of value which makes sense the thing of value here the virtual chips it's worthless so focused on that exact paragraph paragraph fifty nine she didn't lose money here she but chips knowing that their virtual chips that could only be used in this game and regardless of whether she was left with one chip or she had ten billion chips they're worthless they can never come outside this game never be last as the psyches allowed her the privilege of continuing to play and if she's addicted that would be worth a lot to her bull's eye is very  that the purpose of the game was to accrue the points so you could transfer them into cash or merchandise and the other important point about bull's eye is look at the parties in the procedural posture impose i you had the plaintiff file a  declaratory judgment action against the gambling commission why because the gambling commission in that case and said they had deemed this game to be an illegal gambling device that's a very different here than what we have in our case where the gam commission has actually come out affirmatively issued a pamphlet saying free to play games as long as you can't convert those chips back into real money then it's completely legitimate you can the pamphlet has any presidential value whatsoever gaming commission absolutely so it's not presidential that obviously it's not going to bind this court right but because there is ambiguity at the core as noted this gambling act you know was from the one nine hundred seventy s before there were i phones androids computers and so when you when you try to interpret the statute it's very helpful to look at the the way that the government agency charged with enforcement appropriation of the statute where's the ambiguity you said  what's your argument you you argue the statute as am big us are you say it's a plain reading and the way you read it so i just wanna understand what's your view of the statute is it appl weeding and the only interpretation is yours or there is ambiguity and why we think there is an ambiguity and it's a late ambiguity of trying to apply the thing of value definition to the on line free to play games and it's because if you look at the definition of thing of value the last two words there without charge which cut the plates that everything coming before that cost money and here because we have a free to play  game that ninety seven percent of the people who play it never pay money to play then that's why we think there could be a late night beauty but it also doesn't matter because according to the rule of lenity in strict construction if there are two reasonable interpretations of the statute you have to find the one in favor of the to do the narrow application here in favor of churchill downs we have a bull's eye and i know you effort to distinguish that but playing the game without charge and therefore qualified as a thing of value i guess how can the court accept your position that the virtual chips here which also extend the privilege of playing the game are not things of value given this authority is the key word in that quote from both the game because the game in bowls i was a game where you won cash and merchandise that's very different here it's like soto case in the northern district of illinois when it was constraining california law it said yeah of course in california extended gameplay could be a thing of value but it's that only where the game costs money to play it use an example of a game that cost a quarter if you time you lose a game you have to put a quarter into play it the said ok said yes of course if you get free game play you're not putting your quarter in and it's i think a value but what we have here is a game that is free to play the vast majority never call you and say look it's analyze that council if i go online and i start playing and i want to continue to play i gotta pay for right absolutely have a provision in your app so that people pay if it's really a free game why do you have that why don't you just put up a free game no ability to pay whatsoever what with the ability to pay does your honour's allowed you to enhance your entertainment better already it's the same thing is if you're playing a race card game and you could pay to saying this is a free game it's no problem it's all different but the reality is if you want to play when your chips are gone you got to buy more and you have an app that allows people to buy more and the money goes to churchill downs which doesn't do it because they just want people to have free games right no your honor that's not a correct characterization in every one the reason why is when you run out of chips you wait until the you get more chips which happens daily and that's what ninety seven percent wait what if you can't wait well then you just want to play right now i mean you know you're so excited the game is so just blows your mind you want to play you got to pay have got to pay for legitimate cash in your chips in that instance you can enhance your entertainment by paying if you can't wait for the next distribution you know within likely hours of free chips then you have the option of paying but the reality is churchill downs doesn't do this for fun it wants to make money right of course is the business is a profit is a business  want to make money it isn't a free game oh it wants to make money it it gets people growing by giving him free chips but that's what we're wrestling with years under the statute is the fact that people can continue to play by buying doesn't make it a thing of value because they want to continue to play but it doesn't your honor but it also doesn't matter because courts like mason versus machines own assume that the game is illegal gambling and they say even though it is illegal gambling if it is you didn't lose anything of value here why not because you paid money to get chips knowing that you were going to take those chips and play a game with them you didn't lose money what you got is you purchased right know in the black market isn't relevant for a number of reasons first there's no allegation the complaint that the plaintiffs here ever attempted to go to the black market ever sold them back are completely not relevant to the case and the second is what judge that the black market allegation contradicts the exact docking she touched her complaint but let me give the court one more reason under the bridge cover of money lost a gambling act why you don't even need to get to thing of value and that's because if you look closely at the language it allows you to collector from the proprietor for whose benefit such a game was played here these gambling games were not played for the benefit of churchill downs churchill downs is already made its money by the point that people buy their chips this is the exact point it was made machines own and the phillips case of that a good church with downs made its money by people buying chips though if people make the option to enhance their entertainment by buying chips right churchill downs is done it doesn't care if you play one game play no games because they get no but then they're going to lose or gain money wasn't but every time people buy chips they make more money right so it makes on day one they make some of the  make some a day three they're making money that that's true but the language of the statute says that says look at the game in the game here is when they go on to play is say up online casino is slot machine churchill downs does not benefit from the playing of that game because it regardless of whether the plaintiff wins a jackpot gets ten million chips in that game or does agree but that doesn't really matter in this case because  downs establishes the platform which if people want to play more in their free chips are gone and it makes money and i don't know whether your opposing counsel is correct the claims of millions and millions of dollars were made by churchill downs in connection with this game would you agree with that by the way i would say i am not sure in the record how much money was made but definitely millions of millions of dollars ok or made but the machines own corps and the  money lost why because you didn't lose money playing the game you've already taken your real money converted into some virtual currency and then you get your entertainment by spending that virtual currency there's also been a lot of discussion of i let me make one point about bull's eye two is that in both as i remember the gaming commission had declared that game to be illegal gambling and obviously the gambling commission sees a distinction here because they say fuck gamli commission member voted on anything  just a pamphlet has no official it will wait you know presidential by right i disagree even if it's not any different given it's still a body of knowledge by the governmental agency charged with until some of our very able in the court here were to write a book on how to win a case with that by the ninth circuit on how to win a case absolutely not but that's not what happened here who will happen is four years ago the gambling commission comes up with a pamphlet that post to its website for businesses and consumers to look at and it's been posted that website to this day for years and has real world implications the plaintiff here is urging this panel to disregard and contradict the gambling commission but for four years now we've had businesses like churchill downs relying upon this guidance from the exact agency charged with enforcing the law and they've complied exactly there's no dispute about that they comply with the guidance and yet we have a plaintiff here who says despite your complaints no it's actually illegal gambling and you know millions but in addition to the businesses you also have consumers here who have very real world implications of what the plaintiff is asking here if the plaintiff is right we don't think she is but she's right this is an illegal gambling and in washington if you're playing spending money illegal gambling it's called professional gambling the third degree it's a misdemeanor public punished by up to a year in jail  five thousand dollars and these implications are significant here now that the gambling commission of course is not binding on this court but you have something they've put into their website for the public for the consumers for the bin food to read for the last four years to rely upon and just like that the court said in silverstreak that was a policy memorandum and i may ask you this because you're almost out of time you argue your motion for why churchill downs should be substituted out for let's say you want  big fish games to be substituted as the defend your absolute big fear james is the company that develops this this game this application if you look at the terms of use of the plaintiff attached to a complaint it's a contract with big fish games if you look to the allegations in her complaint at paragraphs ten eleven twenty two and seventy i don't want to just add them as defendants rather than take yourself off because they may not have any money the plaintiffs just said they got games she said that  percent independent subsidiary big fish games as of january of this year that threat is gone there's no dispute the churchill downs sold big fish games to subsidiary to another company i want to sell it for i think that it was nine hundred million but i can't remember a good deal but for example you don't make any money but like i said to per it's a for profit business of course that they want to allow people to enhance their entertainment but at the end of the day there's no connection left is just like the lucent versus meyer case where in that case the interest the eighteenth he sold the division to lucent the person had employment discrimination case and they allowed the substitution after a trial on appeal now why did you wait until now to seek the substitution because we still had that third your honor of where churchill downs still owned at that time big fish games as of january ninth of last month the sale was completed you done this within a month of the sale we did it within days before the sale was completed in anticipation that it would close in between us following our motion and the plaintiff filing her opposition it closed one of your documents  wrote my law firm is not involved and say ok not at all would it be fair to say that in a normal transaction when you're selling a business that if there's a pending lawsuit that is that indemnification or at least taking into account what yes just a few brief points to start i'd like to correct a few things that were said about the record there was repeated reference made to enhancing gameplay and that comes from a line of cases that discusses things where you can play the game for free but if you pay more than you're more likely to win in this game if you if you run out of chips and you don't pay it's not just that you can't play well you can't play it all right so this the chips do not enhanced gameplay they in fact are what allows you to play the game if you don't have you can't play as far as giving away chips every day churchill downs has said this without citation to anything it's not in the complaint we allege that they give away one hundred thousand free chips which i know sounds like a lot of chips are worth very little that's like ten spins of the wheel they give that away at the beginning there is no other allegations about any other free chips let me ask you this if you are successful in this lawsuit what do you get what does what what does that mean what's the result it's the net last right so you don't get you don't get back the value of free trips you don't get back the value of like your top of you know what you managed to win i'm talking about you your if you win this lawsuit what's the result the result is that the people who paid money for chips get back the value of the thing lost that's what the statute is required so you take over the whole time of playing what is there what is their net loss and in reality and as we allege you always lose everything you know that the statute says that that this kind of entertainment and it may be entertaining is illegal gambling and to discourage it yes you get what you put in back and so people will get it this is a class then for people and just in washington are as of the much made the ramification or implications that this would be constitute third degree gambling is your view you know i don't i don't know i will say that in order to be convicted of a crime you have to show mens r to show that you intended to i don't know what the required mens rea is for gambling my guess would be that that you wouldn't be able to show it here i guess but also be that the i mean this is up to washington prosecutors but my guess is that this is not enforcement priority i also just don't don't think that it's a relevant consideration here in order to discourage gambling the washington legislature passed this statute allowing people to recover money from proprietors and that's the key point why are there other games that are big fish what are similar to it that will be affected there very well may be and in fact the gambling commission issued a cease and desist letter last year to one of these games its australian company called valve that was doing a very similar thing they had these these free you know it's free to play games otherwise that this arrangement was illegal with regard to this defendant specifically yes again the commission hasn't hasn't commented with regard to this defendant that they appear misspelled in that powerpoint presentation prevented by the employees which i don't i don't think