Defendant Can’t Send Virtual Gambling Claims to Arbitration

Churchill Downs’ Big Fish Casino is accused of violating Washington’s gambling statute. It moved to dismiss and was successful in district court. On appeal, the Ninth Circuit said that the Big Fish casino may violate Washington’s anti-gambling statute. (Previous blog posts on this case here and here. See also the Director of the Gambling Commission’s statement on the appellate ruling: “Director’s statement regarding Ninth Circuit Court of Appeals’ published decision in Kater v. Churchill Downs“.) The ruling practically said that Big Fish violated the statute, and sparked a flurry of lawsuits, which are all pending in various stages in the Western District.

Having lost in the Ninth Circuit, Big Fish tried to invoke its arbitration clause and compel arbitration. The court says:

Churchill Downs waived its right to arbitration when it took its first bite of the apple and chewed thoroughly for over three years.

Ouch! The court says that the terms don’t unequivocally delegate the issue of waiver to the arbitrator, so the court must decide it. As to waiver, Churchill Downs took acts inconsistent with its putative right to arbitrate by litigating the case in district court. And Kater would be prejudiced because the litigation already cost her a lot more than arbitration would have.

It will be interesting to see if this spurs a settlement, or if Churchill will continue to litigate the dispute. Given the indications by the Ninth Circuit and this court regarding the legality of its operations, it has to be nervous. The defendants in the numerous other lawsuits pending in the Western District are likely watching this closely and not happy about this decision either. Most or all of those lawsuits are pending in front of the same judge.

Case citation: Kater v. Churchill Downs, CV 15-612 RBL (W.D. Wash. Nov. 2, 2018)

Related posts:

Ninth Circuit Reinstates Virtual Platform Gambling Lawsuit Against Big Fish

Federal Court Rejects Online Gambling Lawsuit Against Valve–McLeod v. Valve

Big Fish’s Virtual Casino Doesn’t Violate Washington’s Gambling Statute

Virtual Casino Doesn’t Violate California’s Gambling Law–Mason v. Machine Zone (Guest Blog Post)

Appeals Court Affirms Rejection of Gambling Claims Against Machine Zone