The Legal Battle Over High 5 Games’ Mobile Apps
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.
Online Gambling Definition and Local Laws
Washington classifies online gambling as any activity 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. This classification has led many gaming operators, even those that identify as social platforms, to steer clear of operating within the state's boundaries.
High 5 Games contended that it operates with virtual coins and is a “social casino.” Their games emulate the video slot machines found in physical casinos, offering a similar experience without the same legal implications—or so they argued. However, Judge Cartwright determined that High 5's games fall under the prohibitions outlined in the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act.
Judicial Findings and the Road to the Verdict
The verdict comes six years after High 5 Games player Rick Larsen first filed the suit. Larsen argued that the apps promoted illegal gambling by requiring players to purchase additional chips using real money. High 5 rebutted that players can use free coins given upon registration and periodically awarded. However, the contention was that users cannot play with regularity unless they are willing to pay, pointing to the monetization aspects of the games.
Washington law recognizes virtual currency as a “thing of value” even if it cannot be redeemed for cash. This key point played a significant part in the court's decision. Judge Cartwright ruled that the company is liable to pay damages to Larsen and other plaintiffs, with the exact amount of damages to be determined by a jury.
High 5 Games has stated that it has made efforts to cease operating in Washington following the ruling. However, SBC Americas has not yet received a response from High 5 Games on the verdict.
Implications for Other Gaming Companies
This ruling also has broader implications for other gaming companies operating in Washington. A separate case involving High 5 Games, Wilson vs. PTT, LLC, is still active but has not made progress since early 2023. Furthermore, Judge Robert Lasnik ruled that online gaming companies DoubleDown Interactive and IGT also violated Washington state gambling laws. The games offered by these companies are free to play but users can pay for additional chips, creating a similar dynamic where consumers bet to acquire more chips, which they otherwise would need to buy.
Quotes and Legal Takeaways
Judge Cartwright summed up the judicial findings succinctly: “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 underlines the court's stance on the legal framework surrounding online and social gaming platforms that operate with microtransactions or in-game purchases of virtual currency.
The court's ruling serves as a cautionary tale for other gaming operators who might be considering entering the Washington market or who currently operate within it. Compliance with state laws is paramount, and the definition of what constitutes gambling can have substantial legal and financial consequences.
Conclusion
The ruling against High 5 Games marks a significant moment in the ongoing regulation of online and social gambling platforms. It sheds light on how state laws interpret virtual currencies and their legal standing concerning gambling regulations. As the legal landscape continues to evolve, it's clear that operators will need to tread carefully, ensuring full compliance to avoid similar legal entanglements.