High 5 Games fined $24.9 million in social casino ruling

The Washington court has ordered High 5 Games, an online casino operator, to pay damages amounting to $24.9 million. This is the first ruling of its kind in the US and has set a precedent for social casino platforms that operate within a grey area of the law. The court ruled that the social casino model of High 5 Games violates state gambling laws, resulting in significant financial loss to its users.

Washington court’s ruling against High 5 Games

High 5 Games is one of the well-known brands in the development of online casino games, offering slot-style gaming experiences. Unlike traditional online casinos, social casinos do not provide real money cash-out options but allow users to purchase virtual currency to keep playing. This business model has long operated in a legal grey area, but Washington’s ruling has forced it under intense scrutiny.

High 5 Games was found to breach state gambling statutes after a thorough legal process where the jury believed the company inflicted huge financial damage on users. The court commanded the company to pay $18 million to the class of players in Washington as well as increased damages of $7 million.

Reasons behind High 5 Games’ legal issues

Perhaps the most damning piece of evidence was internal documentation where High 5 Games’ employees referred to high-spending users as “whales” and targeted them. This was a practice considered unethical, and in the absence of a legal framework governing social casinos, this is what brought down the company in court.

This case gave victims a voice to highlight the dangers of unregulated online gaming. The ruling can give players a legal pathway to reclaim losses from social casinos that operate under similar business models.

Reactions and industry implications

Todd Logan, a partner at Edelson PC, the law firm representing the plaintiff, emphasised that this case is just the beginning. He pointed out that tech companies profiting from gambling addiction must be held accountable. Advocacy groups have also applauded the decision, pushing for further regulations to prevent similar exploitation.

Logan said, “This verdict is a milestone, but it’s only the beginning. Some of our clients lost hundreds of thousands of dollars to their gambling addictions here, and big tech cannot be allowed to continue to profit from these devastating addictions. We will continue fighting to ensure big tech answers for its role in enabling and profiting from illegal gambling.”

This ruling has sent shockwaves through the social casino industry. Many operators are now reassessing their business models to avoid legal repercussions. Several other online casino operators have already chosen to settle out of court, collectively paying over $650 million in damages.

The US crackdown on social casinos

Other states, including Maryland, West Virginia, and New Jersey, are also addressing social casinos, with Maryland proposing stricter gambling laws, West Virginia preparing legal action against sweepstakes operators, and New Jersey considering regulation and taxation instead of bans.

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