Very interesting dialog. I have thought about this quite a bit. I live in Washington State, and it is illegal to "gamble" online. Pokerstars, Full Tilt and others will not even give me an account. So... I have to resort to "free" sites and "freerolls" to play online.
Per definition in the WA state law, gambling is defined as "putting something of value at risk". If you are not putting something at risk, then you are not gambling. You are playing a game and spending your time, like any other game. It matters not whether you are playing cards, Halo, or a flight simulator, it is a game. I have received over $2500 in cash from these freerolls, and I have no doubt that I have played "legally".
Now the interesting part is if you use freeroll winning to play a for money game, rather than cash out. If we intend to say that the money in your account at the poker site is not really yours, then you can talk yourself into saying that you are not really risking anything. But this is really a bit of a slippery slope, isn't it.