n a landmark ruling that could have widespread implications for the social casino industry, a federal jury in Washington state has awarded nearly $25 million to a class of players in a case against High 5 Games. The ruling reinforces the state’s strict stance on social casino-style applications, following the precedent set by the Ninth Circuit’s Kater v. Churchill Downs decision. This latest judgment underscores the ongoing legal risks operators face when offering virtual gaming experiences that include purchasable in-game currency.
The Legal Battle Against Social Casinos
The lawsuit centered on High 5 Games’ mobile applications—High 5 Casino and High 5 Vegas. Plaintiffs argued that these apps function as illegal gambling platforms under Washington law due to their use of virtual currencies. While players cannot directly exchange these currencies for real money, the court determined that the ability to extend gameplay through additional purchases qualifies as a “thing of value,” a key component in defining gambling under Washington state law.
This interpretation has been a focal point in several high-profile cases. The ruling follows the legal trajectory established by Kater v. Churchill Downs, where the Ninth Circuit held that virtual chips used in Big Fish Casino constituted a “thing of value,” leading to a massive $155 million settlement. Since then, courts applying Washington law have consistently ruled against social casinos, maintaining that virtual currency—even when confined to gameplay—meets the statutory definition of gambling.
What This Means for Social Casino Operators
For businesses operating in the social gaming space, Washington has become an increasingly hostile jurisdiction. The state’s courts have set a firm precedent that virtual currency extending playtime is legally indistinguishable from real-money gambling. This raises significant concerns for any company offering social casino games with in-app purchases.
While Washington is currently the most aggressive state in prosecuting social casino cases, other states have similar legal language regarding “things of value” in their gambling statutes. Legal experts warn that this decision could influence courts in other jurisdictions, potentially expanding the regulatory crackdown on social casino-style platforms nationwide.
The Risk of Doing Business in Washington
Given the legal climate, many social casino operators may need to reconsider their player eligibility policies. The safest approach appears to be excluding Washington residents altogether. This is a path some operators have already taken in response to past legal challenges, geofencing users in restrictive states to mitigate legal exposure.
The alternative—continuing to offer social casino apps in Washington—now carries heightened financial risks. The nearly $25 million awarded in this case, combined with the precedent set by the $155 million Churchill Downs settlement, illustrates the potentially devastating consequences of non-compliance. Operators must weigh these risks carefully and seek legal guidance when structuring their platforms.
Potential Industry-Wide Consequences
This ruling raises broader questions about the future of social casino apps and their business models. Many companies rely on microtransactions and virtual currency sales to monetize free-to-play gaming experiences. If additional states adopt Washington’s interpretation, the legal viability of these business models could come under threat.
Some industry insiders speculate that social casinos may need to explore alternative monetization strategies, such as:
- Subscription-based access models instead of pay-per-play currency sales.
- Reward systems that do not involve purchasable extensions of play.
- Increased emphasis on advertising revenue rather than in-app purchases.
Such changes could fundamentally alter the social casino landscape, pushing operators toward models that steer clear of legal scrutiny.
What Comes Next?
With this case setting yet another precedent, legal experts anticipate further lawsuits targeting social casino operators in Washington and beyond. As courts continue interpreting gambling laws in ways that disadvantage social casino-style platforms, companies in the industry will need to remain vigilant and adaptable.
Additionally, legislative intervention could play a role. While Washington has made its stance clear, other states may see lobbying efforts from gaming companies aiming to secure clearer regulations that differentiate social casinos from real-money gambling.
For now, the message from Washington courts is unequivocal: social casino-style applications that involve purchasable in-game currency carry significant legal risks. Companies must proactively assess their exposure and consider revising their business strategies accordingly.
Final Thoughts
The latest ruling against High 5 Games serves as a stark reminder of the legal challenges facing social casino operators. The combination of unfavorable court interpretations, hefty financial penalties, and potential spillover into other states makes it clear that the industry must evolve to survive. Whether through geofencing high-risk jurisdictions, adapting business models, or seeking legislative solutions, social casino companies will need to act decisively in the wake of this decision.
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