Illegal gambling allegations
Google, Facebook, and Apple are all defendants in a class-action lawsuit that alleges that they were part of an “illegal gambling conspiracy” involving social casino games. The complaint was filed in the US District Court for the Northern District of California on Monday.
Three separate complaints have been amalgamated into a single lawsuit in which there are 25 plaintiffs. There is a hierarchy of complaints, with Facebook appearing to be the initial area of focus. The original filing of the case against Facebook came in April.
main focus of the lawsuit relates to free-to-play casino games
The main focus of the lawsuit relates to free-to-play casino games, which are allegedly not legal in California. The implication is that the three tech giants make up a “social casino enterprise” and entered “dangerous partnerships” with slots developers with the aim to direct Californians to play slot games on social casino apps.
The complaint outlines various examples of plaintiffs suffering financial losses as a result of these types of gambling offerings. The suit claims that the three companies have affected interstate commerce and also caused damage to interstate commercial activity. The goal of this legal action is to forbid the platforms from offering social casino games, as well as to make them return the profits they have made from these operations. It is also is seeking class-action relief.
Very lucrative offerings
The lawsuit outlined how the providers of social casino games rely on companies like Google, Apple, and Facebook in order to reach an audience, to host the games, and process payments. In return, the lawsuit claims that the tech giants need social casino game developers such as DoubleDown Interactive to create “profit-driven and addictive” apps on these platforms in order to create lucrative streams of revenue.
The lawsuit claims that Facebook has a 30% financial interest for being a host for these games, directing people to play these games, as well as acting as the bank. The lawsuit also claims that the likes of Facebook are the main promoters for these alleged forms of illegal gambling.
The complaint claimed that the DoubleDown Casino will sell about $400m in virtual currency to consumers this year. About $240m will go to DoubleDown Interactive, $40m to IGT for licensing slot machine IP to DoubleDown, and the remaining $120m will go to the host of the apps, such as Facebook. The complaint even goes as far to claim that the social casino enterprise could be considered to be a form of racketeering. It stated: “Most or all of the illegal slots are also hosted and promoted by the other platform members of the social casino enterprise: Apple and Google.”
Not the first complaint
The lawsuit cites a legal precedent from a 2018 case in Washington State involving social casino game supplier Big Fish Games. The Ninth Circuit of US Court of Appeals deemed that the virtual currency used as part of these social casino games was “something of value” as per state law and as a result, virtual currency was equivalent to real currency. Therefore, these types of casino games were deemed illegal gambling. Big Fish settled the case for $155m.
There have been numerous other lawsuits filed across the United States in recent years regarding social casino apps. These lawsuits often name tech companies like Google and Apple as defendants. They usually claim that social casino games try to navigate around state gambling laws by not offering any real money winnings, but that they should still be considered illegal gambling.
In 2020, players bought about $6bn worth of virtual chips.
Social casino games are big business for the tech giants. In 2020, players bought about $6bn worth of virtual chips. Nine of the top dozen grossing apps on the Facebook platform were social casinos. The cumulative class-action lawsuit filed in California this week spoke about why these apps are so lucrative, stating that it is due to them mixing “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.”