Multiple online gaming companies have come under fire from Washington state officials in the US regarding some of their online games. State officials have deemed the games offered by the four companies: Huuuge Games, DoubleDown Interactive, High 5 Games and Playtika, as forms of illegal gambling under to Washington state law.
This new string of lawsuits follows a recent federal appeals court ruling that found another online gaming company, Big Fish Games, to be in violation of Washington state law over the company’s offering of “free-to-play” games.
“Free-to-play” games are popular among the online gaming community because they offer a form of free entertainment in exchange for no deposits or money in return to play. In general, these games do not constitute gambling. However, many state officials are taking a closer look at companies offering them, as they could be considered illegal.
The four gaming companies involved in the legal writ offer types of games typically found in casinos, such as Video Poker, Blackjack, Slots games and Roulette. The “free-to-play” games in question incorporate digital tokens with no monetary value, and players can play until their tokens run out.
The reason the gaming operators face legal prosecution is because members can earn more “free tokens” by purchasing thousands of “free” chips using real money. Washington state officials feel that this constitutes illegal gambling
Free games under fire
If these lawsuits, like the Big Fish suit before them, prove successful, the outcome could have major implications for the online gaming industry and casual games market. Most online games utilize in-app purchases to gain profits, but the recent backlash could seriously hinder and even stop revenues.
The suits, filed in U.S. District Court of Seattle and Tacoma, involve three plaintiffs and center around the same sentiments as the Big Fish claim. The center argument is the value designated to chips by the gaming operators. Though the tokens are technically not worth money, the grey area that they do represent in terms of worth is critical for continuing the game.
One of the lawsuits includes the following clause:
Double Down Casino games are illegal gambling games because they are online games at which players wager things of value (the chips) and by an element of chance (e.g., by spinning an online slot machine) are able to obtain additional entertainment and extend gameplay (by winning additional chips).
Free still means big business
The online casino gaming industry is big business, but many companies are facing scrutiny and legal troubles over their casual games. JP Morgan issued a report in 2016 revealing that the worldwide revenue generated for these “free” games of chance was nearly $4 billion, with that number only continuing to grow. Online gambling lawsuits are not a new thing, and are in fact not even rare. Most of the time these online game-makers escape the fire and come victorious from legal suits, but last month’s Big Fish ruling was unusual.
The fact that more and more of these free-to-play games are beginning to resemble casinos under the broad stroke of offering “something of value” instead of real money is a phrase that did not sit well with Washington lawmakers. Online gambling is a legal grey area, which is not governed by federal law. This means that most online companies must follow state laws within America.
Venkat Balasubramani, an attorney representing gamers in a California case focused on similar accusations regarding consumer laws, has stated that the lack of federal laws makes the online gambling debate a challenge. Balasubramani stated “The fact that it’s state law is a wrinkle because it’s not easy for Washington to reach outside its borders and enforce Washington law against foreign companies,” Balasubramani said. “That’s always a tricky issue in the legal arena.”