A federal judge in Washington state has ruled that two social casino apps from New York-based High 5 Games are illegal gambling operations in the state.
This ruling means the company may owe millions in damages, as the RMLGA applies to real money losses, not just virtual chips.
Judge Cartwright sided with the plaintiff, former player Rick Larsen, concluding that the games also breached Washington’s Consumer Protection Act (CPA) alongside RMLGA.
Determining Damages
Rick Larsen initiated the class-action lawsuit in 2018. The lawsuit claims that players receive free virtual coins when they register through platforms like Facebook, Google Play, and the App Store. Once these virtual coins are depleted, players must spend real money to continue playing. According to court documents, Larsen spent $7,470.50 on the apps.
Under the RMLGA, anyone who loses money or anything of value in illegal gambling has the right to recover those losses from the game operator. Subpoenas issued to Amazon, Apple, Google, and Facebook revealed that Washington residents spent over $21.6 million on these apps from 2014 to 2023. However, the judge determined that the exact amount of damages should be decided by a jury after further investigation.
Legal Precedent
Judge Cartwright’s decision drew on a 2018 precedent set by federal judge Milan D. Smith of the Ninth Circuit Court of Appeals. In that case, it was ruled that virtual play chips in another social casino, Big Fish, could be considered “something of value” under Washington law. Unlike other states, Washington recognizes the value of virtual chips in gambling contexts.
The plaintiffs in the Big Fish case eventually received a $155 million settlement. Cartwright noted that High 5’s virtual coins operate similarly to those of Big Fish, reinforcing her ruling.
This decision marks a significant moment in the regulation of social casinos, emphasizing that virtual currency in these games holds tangible value under Washington law.
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