High 5 Games' Apps Deemed Illegal in Washington
In a landmark decision with far-reaching ramifications for the online gaming industry, two mobile applications offered by High 5 Games have been ruled illegal in the state of Washington. After years of legal battles, Western Washington District Court Judge Tiffany Cartwright determined that High 5 Casino and High 5 Vegas fall under the classification of online gambling, which is illegal in Washington.
Legal Definition of Online Gambling
According to Washington state law, online gambling encompasses any activity that requires users to stake value on the result of a game of chance or an event with a prize contingent on a particular outcome. This broad definition has created a challenging environment for many gaming operators, even those in the social gaming segment, prompting them to avoid operating within the state.
High 5 Games' Defense and Judicial Ruling
High 5 Games has long contended that its apps operate with virtual coins and thus qualify as a "social casino." However, these games simulate video slot machines commonly used for gambling in physical casinos, a significant aspect that Judge Cartwright considered in her ruling. She concluded that High 5’s applications are prohibited under both the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act.
The verdict, which took six years to reach after player Rick Larsen first filed the suit, indicated that the apps promoted illegal gambling practices by requiring players to purchase additional chips with real money to continue playing. Although High 5 Games argued that players receive free coins upon registration and periodically thereafter, Judge Cartwright determined that users could not play regularly without making purchases.
Virtual Currency as a "Thing of Value"
One of the pivotal aspects of the case was the recognition by Washington law that virtual currency, even if not redeemable for cash, is considered a "thing of value." This interpretation played a crucial role in Cartwright’s decision, leading her to declare the company liable to pay damages to Larsen and other plaintiffs. The exact amount of damages will be determined by a jury at a later date.
High 5 Games stated that it has made attempts to cease operations within Washington, yet the court's decision explicitly pointed to the company's liability in violating state gambling laws.
Ongoing Litigation in the Gaming Industry
Interestingly, High 5 Games is not alone in facing legal challenges in Washington. A separate case involving the company, Wilson vs. PTT, LLC, remains active but has shown no progress since early 2023. Moreover, Judge Robert Lasnik recently ruled that DoubleDown Interactive and IGT, two other major players in the online gaming market, have also violated Washington state gambling laws. Similar to High 5 Games, these companies offer games that are free to play but allow users the option to purchase additional chips. Consumers thus engage in betting to acquire more chips, which they would otherwise need to buy with real money.
Industry Implications
This ruling against High 5 Games is likely to serve as a precedent for future legal actions against other social casino operators. The verdict reiterates the stringent stance Washington state has taken against any form of online gambling that involves monetary transactions, whether directly or through virtual currencies. Gaming companies now have to carefully navigate the complexities of state gambling laws, especially in states like Washington where the legislative framework is particularly unforgiving.
SBC Americas has reached out to High 5 Games for a comment on the verdict but has yet to receive a response. The outcome of this case and similar ongoing litigations will be closely watched by industry stakeholders, legal experts, and consumers alike, and will undoubtedly shape the landscape of online gaming operations in the United States.
Conclusion
As the dust settles on this landmark ruling, one thing is clear: the classification of virtual currency and the definition of online gambling will continue to evolve. Companies that find themselves on the wrong side of these laws face significant legal and financial repercussions. Stakeholders in the online gaming industry must remain vigilant and proactive in compliance to mitigate the risks posed by stringent legal environments, ensuring their operations are in line with state-specific regulations.