A federal judge in Washington state has ruled that two social casino apps operated by New York-based High 5 Games are illegal. Western Washington District Court Judge Tiffany Cartwright’s ruling means that the company is now liable to pay damages to the affected parties under the state’s Recovery of Money Lost at Gambling Act (RMLGA).
Cartwright agreed with the plaintiff in the case, former player Rick Larsen, that the games violated Washington’s Consumer Protection Act (CPA), as well as RMLGA. Larsen first filed the class-action lawsuit against High 5 Games in 2018.
High 5 Casino and High 5 Vegas players receive virtual coins for free when they register on tech platforms like Facebook, Google Play, and the App Store. After they reach their virtual currency limit, they need to purchase additional coins with real money if they want to continue playing. Larsen spent $7,470.50 while playing the apps, court documents show.
Larsen claimed that the apps promoted illegal gambling by requiring players to purchase additional chips using real money. High 5 counterargued that players can opt to use the free coins they begin with upon registration and are subsequently periodically awarded and do not need to spend real money.
However, Cartwright referred to previous arguments from other district courts which had found that this technicality does not matter because users cannot play with any regularity unless they are willing to pay.
Washington’s law differs from a majority of other states as it recognizes virtual currency as a “thing of value”, even if it cannot be redeemed for cash. Games like High 5 are free to play but users can pay for additional chips. The lawsuit said consumers bet to acquire more chips than they otherwise would need to buy.
The RMLGA states that all “persons losing money or anything of value … on any illegal gambling games shall have a cause of action to recover … from the proprietor for whose benefit such game was played … the value of the thing so lost.”
As a class-action lawsuit, anyone who purchased virtual currency for one of the apps in Washington after April 9, 2014, could qualify to receive a damages payout.
Subpoenas served by Larsen’s lawyers on Amazon, Apple, Google, and Facebook revealed that Washington residents spent more than $21.6 million on the apps between 2014 and 2023. However, the judge did not accept this as a definitive figure and determined damages should be decided by a jury pending further discovery.
Since Washington classifies online gambling as “anything 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,” it is a state that many gaming operators, even social ones, avoid operating in.
High 5 contended that since it operates with virtual coins, it does not constitute gambling and is instead a “social casino,” defined in the verdict summary as games that emulate video slot machines used for gambling in physical casinos.
However, Cartwright stated the games are nonetheless prohibited under the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. “The undisputed material facts as to liability show that High 5’s games violate Washington’s gambling laws and the Consumer Protection Act,” she wrote.
High 5 Games says it has made efforts to cease operating in Washington by geoblocking players and asking for confirmation of their address.