Summary Statements:
After a lengthy legal battle, two mobile apps offered by High 5 Games have been declared illegal in Washington state.
Ruling on High 5 Casino and High 5 Vegas
Western Washington District Court Judge Tiffany Cartwright ruled that High 5 Casino and High 5 Vegas constitute online gambling, which is outlawed in the state.
Washington State's Definition of Online Gambling
According to Washington law, online gambling is defined as any activity that involves users staking value on the outcome of a game of chance or an event with a prize for a specific outcome.
As a result of this stringent definition, many gaming operators, including social ones, avoid conducting business in Washington.
High 5 Games' Defense
High 5 Games contested the charge by asserting that it operates with virtual coins and is a “social casino.” The company argued that it does not qualify as a gambling entity since players use virtual currency, not real money.
The games from High 5 emulate video slot machines found in physical casinos.
Legal Basis for the Ruling
Judge Cartwright concluded that High 5's games are prohibited under the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. The case against the company began six years ago when High 5 Games player Rick Larsen first filed the suit.
Promoting Illegal Gambling
The court found that the apps promoted illegal gambling by requiring players to purchase additional chips using real money. While High 5 Games argued that players could use free coins awarded upon registration and periodically thereafter, the court determined that users could not play regularly unless they were willing to spend money. Under Washington law, virtual currency is regarded as a “thing of value,” regardless of whether it can be redeemed for cash.
Ceasing Operations in Washington
High 5 Games stated that it has made efforts to cease operating in Washington. Nevertheless, Judge Cartwright ruled that the company must pay damages to Larsen and other plaintiffs, with the amount of those damages to be determined by a jury.
Awaiting Comments and Further Legal Battles
SBC Americas has not yet received any response from High 5 Games regarding the verdict.
Meanwhile, another legal case involving High 5 Games, Wilson vs. PTT, LLC, remains active but has not seen progress since early 2023.
Implications for Other Gaming Companies
In a related legal matter, Judge Robert Lasnik ruled that online gaming companies 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 purchase additional chips.
Consumers are thus encouraged to bet to acquire more chips, which they would otherwise need to buy, perpetuating practices that align with the definition of online gambling in Washington state.
Judicial Observations
Judge Cartwright emphasized, “The undisputed material facts as to liability show that High 5’s games violate Washington’s gambling laws and the Consumer Protection Act.”
The outcomes of these cases are set to influence the operations of many social gaming companies, profoundly impacting how they conduct business in states with strict online gambling laws. These legal precedents serve as a warning that the distinction between social gaming and online gambling is closely scrutinized and strictly enforced in specific jurisdictions.