A slew of lawsuits against Facebook, Apple, and Google alleging illegal gambling have been consolidated into one master complaint in the US District Court for the Northern District of California.
The combined, amended complaint now lists 25 plaintiffs. It alleges the US tech platforms have formed “dangerous partnerships” with some of the world’s biggest slot companies to create so create “an illegal gambling conspiracy” in the form of social casino products.
The “free-to-play” apps enable users to play games that ape real casino games but with virtual chips. These can be topped up using real money but which cannot be withdrawn as fiat currency. Social casinos use stimulating graphics and behavioral prompts that can create a compulsion loop for the user.
All plaintiffs say they have been hurt financially by this allegedly unholy alliance of social casinos and the digital platforms that host them, market them, and process the payments.
“Like Las Vegas slots, social casinos are extraordinarily profitable and highly addictive,” claims the lawsuit. “Social casinos are so lucrative because they mix the addictive aspects of traditional slot machines with the power of the Platforms … to leverage big data and social network pressures to identify target and exploit consumers prone to predictive behaviors.”
Last year, consumers purchased an estimated $6 billion in virtual chips. Of the top twelve grossing apps on Facebook, nine are social casinos.
The biggest of those, DoubleDown, is expected to generate around $400 million in chip purchases this year, according to the complaint. Of this, DoubleDown will keep $240 million and $40 million will go to Rhode Island-based gaming tech company IGT, which licenses slot machine intellectual property to DoubleDown, according to the suit. The remainder, $120 million, will go to Facebook and other platforms that host DoubleDown games, the suit claims.
Big Fish to Fry
There have been many cases over the past decade accusing social games developers and publishers of offering illegal gambling. Most have failed. That’s because the legal definition of gambling in most jurisdictions requires something of value to be risked on a game of chance or a future event to receive something of value in return.
Since the virtual chips in social casino could were not considered to be “something of value” in the real world, the games could not be classed as gambling.
But in March 2018, a judge in the Ninth Circuit US Court of appeals ruled that virtual chips were indeed a thing of value and that Big Fish’s social casino games therefore constituted illegal gambling in Washington state.
The 25 plaintiffs cite this case in asserting social casino games are also illegal in California and several other states.
They are asking the court to order the platforms to cease offering social casino games and to return the profits. They state claims for class action relief under the Racketeer Influenced and Corrupt Organizations (RICO) Act, California’s Unfair Competition Law, and various state gambling and consumer protection laws.
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