Summary Statements:
After a protracted legal case, two mobile apps offered by High 5 Games have been ruled illegal in Washington.
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.
Understanding Washington’s Online Gambling Laws
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 laws.
High 5 contended that it operates with virtual coins and is a “social casino.” They argued that their games emulate video slot machines used for gambling in physical casinos, thus falling outside the definition of illegal gambling.
Judge Cartwright’s Ruling
Judge Cartwright concluded that High 5 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. Cartwright's ruling stated, “The undisputed material facts as to liability show that High 5’s games violate Washington’s gambling laws and the Consumer Protection Act.”
The apps were found to promote illegal gambling by requiring players to purchase additional chips using real money. High 5’s rebuttal was that players could use free coins given upon registration and periodically awarded. However, the plaintiffs argued that users could not play with regularity unless they were willing to pay, countering High 5's “social casino” argument.
Washington law recognizes virtual currency as a “thing of value” even if it cannot be redeemed for cash, further supporting the court’s decision. As a result, Cartwright ruled that High 5 Games is liable to pay damages to Larsen and other plaintiffs, with the amount of damages to be determined by a jury.
Implications and High 5 Games' Response
High 5 Games has stated that it has made efforts to cease operating in Washington following the ruling. However, as of the latest reports, SBC Americas has not yet received a response from High 5 Games on the verdict. The implications of this ruling are vast, as it sets a precedent for how virtual currency and social casinos are treated under state gambling laws.
Related Legal Battles
This case is not an isolated incident. A separate case involving High 5 Games, Wilson vs. PTT, LLC, is still active but has not made progress since early 2023. 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, essentially mirroring the mechanics deemed illegal in the High 5 Games case.
The current legal landscape indicates increased scrutiny on mobile gaming apps that operate with virtual currencies and in-game purchases. This scrutiny is particularly intense in states like Washington, where gambling laws are rigorously enforced.
Final Thoughts
The ruling against High 5 Games marks a pivotal moment in the ongoing debate regarding the legality of social casinos and virtual currencies within mobile apps. The decision could have far-reaching consequences for other gaming companies operating in similar grey areas. As these legal battles unfold, operators within the gaming industry will need to closely monitor regulatory changes and court decisions to ensure compliance and avoid substantial penalties.
For now, the ruling serves as a reminder that virtual coins and in-game purchases can bring real-world legal challenges, especially in jurisdictions with strict gambling laws like Washington. The final determination of damages in the High 5 case will be closely watched as an indicator of potential financial repercussions for similar companies.