Legal Rulings Against High 5 Games' Mobile Apps
After a protracted legal battle, two mobile apps from High 5 Games have been deemed illegal in Washington State. The decision was handed down by Judge Tiffany Cartwright of the Western Washington District Court, who found that High 5 Casino and High 5 Vegas qualify as online gambling, which is prohibited in Washington.
Definition of Online Gambling
Washington State defines online gambling as any activity that requires users to stake something of value on the outcome of a game of chance or event, where a prize is offered for a certain outcome. This state’s stringent regulations concerning online gambling have led many gaming operators, including social ones, to avoid operating there altogether.
High 5 Games argued that its operations were within legal boundaries because they use virtual coins and function as a "social casino." However, Cartwright found that the games closely emulate video slot machines used in physical casinos, thus falling under the purview of Washington's gambling laws.
Violation of State Laws
Judge Cartwright determined that High 5’s games are prohibited under both the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. This ruling arrives six years after Rick Larsen, a player of High 5 Games, first filed the lawsuit. The apps reportedly promoted illegal gambling by urging players to purchase additional chips with real money to continue playing.
In their defense, High 5 Games asserted that players could use free coins given upon registration and could receive additional free coins periodically. However, it was also noted that users could not play regularly unless they were willing to make purchases with real money. Importantly, Washington law recognizes virtual currency as a "thing of value" even if it cannot be redeemed for cash.
Financial Implications
High 5 Games expressed that they are making efforts to cease operating in Washington. Nonetheless, Judge Cartwright ruled that the company is liable to pay damages to Larsen and other plaintiffs, with the amount of damages to be determined by a jury.
SBC Americas has yet to receive a response from High 5 Games concerning the verdict.
Ongoing Legal Scrutiny
The ruling on High 5 Games isn't isolated. Another case involving High 5 Games, Wilson vs. PTT, LLC, is still active but hasn't made significant progress since early 2023. Moreover, Judge Robert Lasnik ruled that other online gaming companies, including DoubleDown Interactive and IGT, also violated Washington state gambling law. Like High 5 Games, these companies offer games that are free to play but allow users to pay for additional chips. Consumers often bet their existing chips to acquire more, creating a cycle where they might end up needing to purchase more chips to continue playing.
The implications of these legal decisions extend beyond individual companies, signaling stricter enforcement of online gambling laws in Washington. For stakeholders in the gaming industry, these rulings illustrate the complexities and potential legal challenges associated with offering mobile and online gaming apps.
Quotes from the Ruling
In her ruling, 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.” This statement underscores the court's stance that even social casinos operating with virtual currency are not exempt from gambling regulations.
Moving forward, the gaming industry will be closely watching the fallout from these legal proceedings. For players and consumers, the rulings may bring about more stringent checks on other gaming apps currently available in Washington.
As the legal landscape continues to evolve, companies may need to recalibrate their business models and operational strategies to ensure compliance with state laws—or risk facing similar legal hurdles. The outcome of the damages phase of the case against High 5 Games will be particularly telling in terms of its financial implications and potential deterrent effect on other gaming operators.