After a lengthy legal battle, two mobile apps from High 5 Games have been adjudged illegal in Washington. The Western Washington District Court, under Judge Tiffany Cartwright, ruled that High 5 Casino and High 5 Vegas constitute online gambling, which is prohibited in the state.
Legal Framework and Definitions
Washington state law classifies online gambling as any activity requiring users to stake something of value on the outcome of a game of chance or an event offering a prize for a specific outcome. Due to these strict regulations, many gaming operators, including some social casino platforms, avoid running their operations in Washington.
High 5’s Argument
High 5 Games argued that their apps use virtual coins and operate as "social casinos." The company’s games mimic video slot machines commonly found in physical casinos. High 5 maintained that these games are purely for entertainment, with free coins given upon registration and periodically awarded to players.
Court’s Verdict
However, Judge Cartwright found that High 5's games fall under the purview of online gambling as defined by Washington law. She determined that the games are illegal under both the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. A significant aspect of the case was that users could not play regularly unless they were willing to purchase additional chips with real money.
Washington law recognizes virtual currency as a "thing of value," even if it cannot be exchanged for cash. This legal interpretation was crucial in Judge Cartwright's ruling. As such, the court held that High 5 Games promoted illegal gambling by necessitating players to buy more chips to continue playing.
Case Background
The legal saga began six years ago when High 5 Games player Rick Larsen first filed the lawsuit. According to the court's decision, the company is now liable to pay damages to Larsen and other plaintiffs affected by the illegal gambling activities. The exact amount of damages will be determined by a jury.
Company’s Response and Future Actions
High 5 Games has indicated that it has made significant efforts to cease its operations in Washington. As of now, SBC Americas has not received any official response from High 5 Games regarding the recent verdict.
Ongoing Legal Challenges
This ruling is not the end of High 5 Games’ legal woes. A separate case, Wilson vs. PTT, LLC, remains active but has seen little progress since the beginning of 2023. This case is yet another battlefront where High 5 Games faces allegations similar to those in the current ruling.
Moreover, Judge Robert Lasnik has previously ruled against online gaming companies DoubleDown Interactive and IGT, finding that they too violated Washington state gambling laws. These companies offer free-to-play games, which encourage users to purchase additional chips. Players essentially bet to win more chips, creating a cycle wherein they end up spending real money.
Legal and Consumer Protection Implications
This series of rulings underscores the rigorous nature of Washington’s legal stance against online gambling, even when disguised as social gaming. The verdict against High 5 Games serves as a warning to other companies operating in the space. Several gaming operators will likely reassess their business models and operational domains to avoid running afoul of state laws.
Judge Cartwright succinctly summed up the situation: “The undisputed material facts as to liability show that High 5’s games violate Washington’s gambling laws and the Consumer Protection Act.”
As the High 5 Games case illustrates, it’s vital for both operators and players to remain aware of state regulations on online gaming. The case also highlights the extent to which state laws can interpret what constitutes "value" in gambling contexts, even when monetary prizes are not directly involved.
The coming months will be critical for High 5 Games as they navigate the complexities of legal compliance and operational restructuring. Additionally, the pending court cases and potential damages could have far-reaching implications for the broader online gaming industry, especially those operating in regions with stringent gambling laws.