In a landmark decision, Washington state has taken a firm stance on online gambling, ruling against two popular mobile apps offered by High 5 Games. After a lengthy legal battle that spanned six years, Western Washington District Court Judge Tiffany Cartwright declared that High 5 Casino and High 5 Vegas are illegal in the state due to their classification as online gambling platforms.
A Definition Under Scrutiny
Washington state law classifies online gambling as any activity requiring users to stake value on the outcome of a game of chance or an event with a prize on offer for a specific outcome. This classification extends its reach into various forms of virtual gaming, making it a complex environment for game developers and operators. Despite High 5 Games' claims that their apps function with virtual coins and serve as "social casinos," the court found their operations violative of state gambling laws.
Legal Grounds and Findings
One of the critical aspects of Judge Cartwright's ruling was the determination that High 5 Games' apps emulated video slot machines seen in physical casinos. This finding was crucial in two areas of Washington law: the Consumer Protection Act and the Recovery of Money Lost at Gambling Act. The apps were found to encourage illegal gambling by requiring players to purchase additional chips with real money, a point heavily contended by High 5 Games. Although these games provided free coins upon registration and periodically, Judge Cartwright ruled users couldn't play with regularity without spending money, thereby violating state laws.
The state of Washington notably includes virtual currency within its definition of a "thing of value," even if these virtual items cannot be directly redeemed for cash. This nuance makes it challenging for "social casinos" and other gaming platforms that rely on a similar model to operate within the state legally. As a result, many gaming operators, even those not directly encouraging gambling, avoid the Washington market.
Long Road to Justice
Rick Larsen, a High 5 Games player, initially filed the lawsuit in 2017, setting off a protracted legal process. Larsen contended that the High 5 Games platform promoted illegal gambling practices, primarily through the additional chip purchases required for regular gameplay. The verdict marks a significant win for plaintiffs and potentially sets a precedent for future cases concerning virtual gambling elements in mobile apps.
High 5 Games has stated that they have taken steps to cease their operations in Washington following the verdict. The company is now liable to pay damages to Larsen and other plaintiffs, with the exact amount to be determined by a jury. This decision underscores the substantial financial and operational risks associated with non-compliance to state gambling laws, even for platforms that might not explicitly market themselves as gambling operators.
Ongoing Legal Issues in the Industry
The ruling against High 5 Games is part of a broader context of increasing scrutiny on online gaming operations. Another ongoing case involving High 5 Games, Wilson vs. PTT, LLC, remains unresolved but inactive since early 2023. Furthermore, Judge Robert Lasnik ruled that online gaming companies DoubleDown Interactive and IGT have also breached Washington state gambling laws. These companies offer free-to-play games but allow users to purchase additional chips, a model found illegal in the state.
These cases collectively highlight the legal complexities and regulatory landscape for online gaming operators in Washington. Paying close attention to state-specific laws and regulations is crucial for companies to navigate potential legal pitfalls successfully.
Industry Repercussions
The verdict against High 5 Games could have far-reaching implications for the online gaming industry, particularly in states with stringent gambling laws like Washington. Game developers and operators will need to carefully review and perhaps alter their business models to align with legal requirements. The Washington cases may spark a broader review of state and federal regulations about virtual currency and online gambling.
SBC Americas is yet to receive a formal response from High 5 Games regarding the verdict. The industry will undoubtedly aim to gain clarity on how to proceed within the legal frameworks to avoid similar litigations in the future.
In conclusion, the Washington court's ruling against High 5 Games serves as a crucial reminder of the legal hurdles that online gaming platforms face. It underscores the importance for operators to adhere to state-specific guidelines to ensure their business practices remain lawful and avoid significant penalties.