High 5 Games' Mobile Apps Deemed Illegal in Washington
After a prolonged legal battle, two mobile apps offered by High 5 Games have been ruled illegal in the state of Washington.
Judge Tiffany Cartwright of the Western Washington District Court found that High 5 Casino and High 5 Vegas constitute online gambling, which is prohibited under state law. According to Washington state regulations, any activity requiring users to stake value on the outcome of a game of chance or an event with a prize constitutes online gambling.
Illegal Classification and Repercussions
Many gaming operators, including social gaming companies, typically steer clear of operating in Washington to avoid legal repercussions. High 5 Games contended that its platforms operate with virtual coins and are classified as “social casinos.” However, the games offered by High 5 mirror video slot machines commonly found in physical gambling casinos.
Judge Cartwright ruled that the games violated the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. The decision marks the culmination of a six-year legal case initiated by High 5 Games player Rick Larsen.
The Core Debate: Virtual Coins vs. Real Money
The crux of the argument revolved around the nature of the in-game currency. High 5 Games claimed that their virtual coins, which players could earn for free upon registration and periodically thereafter, did not constitute a "thing of value." However, the court found that users cannot regularly play without purchasing additional chips with real money. Washington state law recognizes virtual currency as a "thing of value," regardless of whether it can be redeemed for actual money.
The court concluded that the apps promoted illegal gambling by necessitating real-money transactions for additional chips. As a result, High 5 Games has announced efforts to cease operations in Washington.
Liability and Damages
As part of the ruling, High 5 Games was found liable for damages to Rick Larsen and other plaintiffs involved in the suit. The exact amount of damages to be awarded will be determined by a jury in the following proceedings. The impact of this legal decision could set a precedent for other gaming companies operating in states with stringent gambling laws.
SBC Americas has reached out to High 5 Games for a response on the verdict but has not yet received a statement.
Ongoing Legal Battles
This ruling is not the only legal challenge High 5 Games is facing. In a separate case, Wilson vs. PTT, LLC, progress has stalled since early 2023, but the issues at hand remain similar. In that case, Judge Robert Lasnik ruled that online gaming companies DoubleDown Interactive and IGT also violated Washington's gambling laws.
The games provided by these companies are free to play, but users have the option to purchase additional chips. Consumers then bet these chips to acquire more, which otherwise would need to be bought, thus falling under the state's definition of online gambling.
Industry Implications
The decisions in these cases underscore a critical issue for the online gaming industry: the intersection of virtual currency and real-money stakes. As more lawsuits emerge, the need for clear regulatory frameworks and compliance becomes ever more pressing. While social casinos and free-to-play models can offer a semblance of legal protection, the potential for required in-app purchases complicates matters considerably.
As High 5 Games and other companies navigate these legal landscapes, the rulings will likely inform their operational strategies, especially in states with restrictive gambling laws. The court's insistence on protecting consumers from potential harms associated with gambling highlights the ongoing challenge of balancing entertainment value with legal constraints.
With ongoing developments and potential appeals, the final impact of these rulings remains to be seen. For now, however, the ruling against High 5 Games sends a strong message about the legality and regulation of virtual gambling in Washington state.