After a protracted legal battle, two mobile apps from High 5 Games have been declared illegal in the state of Washington. Western Washington District Court Judge Tiffany Cartwright ruled that High 5 Casino and High 5 Vegas fit the state's definition of online gambling, which is prohibited under Washington law.
Understanding Washington's Online Gambling Laws
In Washington, online gambling encompasses any activity where users stake value on the outcome of games of chance or events featuring prizes for specific outcomes. This broad definition has led many gaming operators, including social gaming companies, to avoid operating within the state.
High 5 Games argued that their apps were "social casinos," utilizing virtual coins that players could not exchange for real money. However, the games simulate video slot machines like those found in brick-and-mortar casinos, making them targets for scrutiny under state gambling laws.
The Legal Findings
Judge Cartwright found that the games offered by High 5 Games violated both the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. The decision came six years after High 5 Games player Rick Larsen initially filed suit against the company. A critical point in Cartwright's ruling was the fact that the apps promoted illegal gambling by requiring players to purchase additional chips with real money to continue playing.
High 5 Games' Defense and Court’s Rebuttal
High 5 Games contended that their players could use free coins provided upon registration and periodically awarded during gameplay. However, they acknowledged that regular play would necessitate additional purchases, typically made with real money. Washington’s legal framework includes virtual currency as a "thing of value," even if it cannot be converted to cash, further solidifying the court’s decision.
"The undisputed material facts as to liability show that High 5’s games violate Washington’s gambling laws and the Consumer Protection Act," said Judge Cartwright in her ruling.
Consequences and Future Implications
As a result of the verdict, High 5 Games has indicated that it is taking steps to cease operations in Washington. Furthermore, the company has been deemed liable for damages payable to Rick Larsen and other plaintiffs, with the amount to be determined by a jury.
High 5 Games has yet to respond to the verdict, according to SBC Americas. Meanwhile, another case involving High 5 Games—Wilson vs. PTT, LLC—remains active but has seen no progress since early 2023.
Industry-Wide Ramifications
High 5 Games is not alone in facing legal challenges related to online gambling in Washington. Judge Robert Lasnik has similarly ruled that DoubleDown Interactive and IGT violated state gambling laws. These companies offer free-to-play games, but allow users to purchase additional chips, creating a gambling-like environment where consumers can bet to acquire more chips, circumventing the need to make additional purchases.
These court rulings signal a stringent enforcement of Washington's gambling laws and may herald more legal scrutiny for similar gaming operators. Companies in the online gaming sector might need to reassess their business models or risk-facing similar legal challenges.
Closing Thoughts
The High 5 Games case underscores the complexities and potential legal pitfalls of operating online gaming platforms in restrictive regulatory environments. The ruling against High 5 Games not only aims to protect consumers but also sets a precedent that could impact many other operators in the industry. As the legal landscape evolves, companies may need to adopt more transparent and compliant business practices to thrive in various jurisdictions.