Summary Statements:
After a protracted legal case, two mobile apps offered by High 5 Games have been ruled illegal in Washington.
Legal Verdict Shakes Online Gaming Industry
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 its stringent laws. High 5 contended that it operates with virtual coins and is a “social casino.” However, High 5’s 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 comes six years after High 5 Games player Rick Larsen first filed the suit.
Controversy Over Virtual Currency
The apps promoted illegal gambling by requiring players to purchase additional chips using real money. High 5’s rebuttal was that players can use free coins given upon registration and periodically awarded. However, the court found that users cannot play with regularity unless they are willing to pay.
This ruling underscores a significant aspect of Washington state law, which recognizes virtual currency as a “thing of value” even if it cannot be redeemed for cash. This interpretation places games using such currency under the umbrella of gambling activities.
High 5 Games says it has made efforts to cease operating in Washington. Nevertheless, Cartwright ruled that the company is liable to pay damages to Larsen and other plaintiffs. The amount of damages will be determined by a jury.
Ripple Effect in the Online Gaming World
SBC Americas has not yet received a response from High 5 Games on the verdict. The implications are potentially wide-ranging for the online gaming industry, which faces increasingly complex regulatory environments across different states and jurisdictions.
A separate case involving High 5 Games, Wilson vs. PTT, LLC, is still active but has not made progress since early 2023. In a related development, 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. Consumers bet to acquire more chips, which they otherwise would need to buy.
Ongoing Legal Battles
The legal scrutiny on social casinos and similar games reflects broader questions about the nature of virtual currency and its role in online gaming. The outcomes of these cases could set significant precedents, not only for Washington but for the broader United States gambling landscape.
For now, this ruling marks a notable defeat for High 5 Games, whose arguments about the social nature of its casino games were not sufficiently persuasive to avoid the court’s finding of illegal gambling activities. The rulings in these cases will be closely watched by stakeholders across the gaming industry, anticipating further regulatory and judicial clarification on the treatment of virtual currencies and their implications for gaming enterprises.
The industry may need to reassess business models, particularly in jurisdictions with strict gambling laws, to ensure compliance and avoid hefty penalties. As these legal battles continue, companies involved in online and social gaming will likely seek more precise guidance on navigating the complexities of state-specific gambling laws.
Final Thoughts
The High 5 Games case serves as a critical reminder of the regulatory challenges that come with the fusion of gambling elements and online gaming. The onus is now on industry players to tread carefully and align their operations with legal requirements to mitigate the risk of legal reprisals and financial liabilities. The outcome of the pending lawsuit, Wilson vs. PTT, LLC, and future rulings will undoubtedly shape the strategic decisions of gaming companies aiming to thrive in an increasingly regulated landscape.
Stay tuned for further updates as the saga of online gaming legality continues to unfold in Washington and beyond.