After a protracted legal battle, two mobile apps offered by High 5 Games have been ruled illegal in Washington state. The 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.
Definition of Illegal Gambling in Washington
Washington law 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 stringent classification has led many gaming operators, even those running social platforms, to avoid operating in Washington.
High 5 Games defended its position by arguing that it operates with virtual coins and functions as a "social casino." The company asserted that its games emulate video slot machines used for gambling in physical casinos, without involving actual currency exchange. However, this defense did not hold up in court.
Violation of State Laws
Judge Cartwright determined that High 5's games are prohibited under the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. The verdict comes six years after High 5 Games player Rick Larsen first filed the suit. According to the court, the apps promoted illegal gambling by requiring players to purchase additional chips using real money.
High 5 countered by stating that players can use free coins given upon registration and periodically awarded. However, it was noted that users cannot play with regularity unless they are willing to pay real money. Under Washington law, virtual currency is recognized as a "thing of value," even if it cannot be redeemed for cash. Thus, the court found that High 5 Games violated state gambling laws by effectively encouraging real-money transactions for non-redeemable virtual coins.
High 5 Games' Liability and Efforts
The court ruled that High 5 Games is liable to pay damages to Larsen and other plaintiffs. The amount of damages will be determined by a jury. High 5 Games has stated that it has made efforts to cease operating in Washington in light of the legal verdict.
SBC Americas has not yet received a response from High 5 Games on the verdict. The unresolved issue of just how much the company will have to pay in damages remains a focal point as the case progresses.
Other Legal Scrutinies
High 5 Games is not alone under the legal microscope in Washington. A separate lawsuit involving the company, Wilson vs. PTT, LLC, remains active but has not seen any significant progress since early 2023. Additionally, Judge Robert Lasnik ruled that online gaming companies DoubleDown Interactive and IGT also violated Washington state gambling law.
These companies offer games that are free to play but provide users the option to pay for additional chips. Users, in turn, bet these chips to acquire more, which they otherwise would need to purchase. This model of payment and play was deemed illegal under Washington’s gambling laws, much like the ruling against High 5 Games.
Impact on the Industry
The ruling against High 5 Games sets a significant precedent for the gaming industry, particularly for companies operating in or targeting markets with stringent gambling laws. The decision underscores the regulatory challenges facing companies that offer virtual gaming experiences akin to actual gambling.
Quotes from the court highlighted the undisputed nature of the material facts, stating, “The undisputed material facts as to liability show that High 5’s games violate Washington’s gambling laws and the Consumer Protection Act.” This assertion drives home the point that even virtual currency models must adhere strictly to state laws.
As these legal battles continue to unfold, gaming operators around the country and the world will undoubtedly keep a close eye on developments. The outcomes could significantly influence how they structure their business models to comply with varying local regulations.
In conclusion, the case against High 5 Games sheds light on the complexities of regulating online and virtual gambling. As state laws evolve and adapt to technological advancements in gaming, companies will need to carefully navigate these legal waters to avoid similar pitfalls.