Summary Statements:
After a protracted legal case, two mobile apps offered by High 5 Games have been ruled illegal in Washington.
Illegal Online Gambling Ruling
Western Washington District Court Judge Tiffany Cartwright found that High 5 Casino and High 5 Vegas constitute online gambling, which is illegal in the state. Washington classifies online gambling as anything that requires users to stake value on the outcome of a game of chance or an event with a prize on offer for a certain outcome. Many gaming operators, even social ones, avoid operating in Washington due to these stringent regulations.
High 5's Defense
High 5 contended that it operates with virtual coins and is a “social casino.” However, despite its classification, these games emulate video slot machines used for gambling in physical casinos. Cartwright determined that High 5's games are prohibited under the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. The verdict culminates a six-year legal battle initiated by High 5 Games player Rick Larsen.
Chipping Away at the Defense
The crux of the contention is that the apps promoted illegal gambling by requiring players to purchase additional chips using real money. High 5 countered that players could use free coins provided upon registration and periodically awarded. Yet, the court found that users could not play with regularity unless they were willing to pay. Under Washington law, virtual currency is recognized as a “thing of value” even if it cannot be redeemed for cash.
Judgment and Repercussions
High 5 Games has asserted that it has made efforts to cease operations in Washington. Nonetheless, Cartwright ruled the company is liable to pay damages to Larsen and other plaintiffs. The exact amount of damages will be determined by a jury. SBC Americas has not yet received a response from High 5 Games regarding the verdict.
Broader Impact on the Gaming Industry
This case isn't isolated. A separate case involving High 5 Games, Wilson vs. PTT, LLC, remains active but has seen no significant progress since early 2023. Similarly, Judge Robert Lasnik ruled that online gaming companies DoubleDown Interactive and IGT also violated Washington state gambling law. The games offered by these companies are free to play, but users can pay for additional chips, effectively mirroring the contentious elements found in High 5's operations. Consumers bet to acquire more chips, which they otherwise would need to buy.
Quotes and Final Thoughts
Adding to the legal arguments, Judge Cartwright stated, “The undisputed material facts as to liability show that High 5’s games violate Washington’s gambling laws and the Consumer Protection Act.” These judgments underline the strict regulatory stance Washington State takes against online gambling, setting precedents that may influence how other states interpret similar business models.
The implications of these rulings resonate through the gaming industry, serving as a cautionary tale for companies operating social casinos or any app-based gambling platforms. With legal challenges mounting, and regulatory scrutiny intensifying, the landscape of online gaming could face significant shifts in the years to come. As companies navigate these turbulent waters, adherence to state-specific regulations and proactive legal strategies will become paramount.