Countless people globally have been harmed by so-called “social” casinos. A U.S. federal court in California has ruled that the world’s largest tech firms must face lawsuits related to alleged harm.
Still, it remains an uphill battle for any American seeking to hold tech giants accountable for addiction caused by the social casinos hosted on their respective platforms.
In a complex lawsuit involving dozens of American plaintiffs who say they have been harmed by gambling addiction, Apple, Meta, and Google argued that they can’t be held liable for processing payments to allegedly independent social casinos.
These types of casinos allow users to buy a virtual currency to play casino games. Users can’t withdraw the virtual currency, and it has no real-world value. It’s basically online gambling with no ability to win real money — but the gambling losses are very real.
One plaintiff in the case said they gambled away over $200,000 on the addictive casino platforms.
Slow-Moving Social Casino Lawsuit
The tech giants have been fighting the lawsuit since 2021, arguing that, as “publishers,” they can’t be liable for processing payments for social casinos.
According to a court filing, the tech giants allegedly take up to a 30% cut of in-app casino purchases.
Critics claim tech giants and social casinos are essentially business partners.
“Payment processing is not an act of publishing,” wrote U.S. District Judge Edward Davila in the 37-page order filed Sept. 30.
“The ‘publisher’ aspect of this inquiry is at the heart of defendants’ asserted immunity,” he wrote. “Payment processing is separate from the publication of apps on app stores.”
His ruling on this specific issue was a win for alleged victims of social casinos.
The tech giants tried to use Section 230 of the Communications Decency Act to dismiss the gambling addiction-related claims.
Davila wrote that people harmed by social casinos did not need to prove that facilitating social casino transactions makes the tech giants into “bookies or brokers.”
Social Casinos Are Gambling
The court gave the tech companies a win by dismissing unjust enrichment claims in the social casino lawsuit. However, Davila wrote that allegations of violations of state consumer protection laws could proceed.
Regarding gambling loss recovery, the judge noted that it may be possible in Kentucky. He denied the motion to dismiss claims raised under the Kentucky loss recovery statute.
The Bluegrass State was famously home to a gambling loss case involving PokerStars.
Davila gave the tech giants a win on gambling loss recovery in other states, including Illinois, which is generally a state favorable to such claims.
In addressing the loss recovery claims, Davila wrote about whether social casinos are gambling.
“To the extent that defendants believe the purchase of virtual chips is not a gambling transaction at all, the court disagrees,” Davila wrote. “When analyzing plaintiffs’ loss recovery claims, the court concluded that the purchase of virtual chips is a gambling transaction.”
“Purchasing virtual chips serves a single purpose—to gamble,” he added. “A transaction made for the sole purpose of gambling cannot be anything other than a gambling transaction. Defendants protest that virtual chips can serve other purposes as well, but on a motion to dismiss, the court must take plaintiffs’ factual allegations as true.”
What’s Next in the Case
The judge wrote that Apple, Google, and Meta can immediately appeal his decision to the 9th U.S. Circuit Court of Appeals.
He also said the alleged victims of social casinos had three weeks to file a notice “indicating whether they intend to proceed on the claims surviving after this order or whether they intend to file an amended complaint.”
A final resolution to the social casino lawsuit could still be a long time away.
The outcome of the case could have implications for a recently launched NFL Super Bowl Slots app.
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