Summary Statements:
After a protracted legal case, two mobile apps offered by High 5 Games have been ruled illegal in Washington.
Western Washington District Court Judge Tiffany Cartwright found that High 5 Casino and High 5 Vegas constitute online gambling, which is illegal in the state.
The Legal Definition of Online Gambling in Washington
Washington classifies online gambling as anything that requires users to stake value on the outcome of a game of chance or an event with a prize on offer for a certain outcome. Due to these stringent definitions, many gaming operators, even social ones, avoid operating in Washington to comply with local laws.
High 5 Games' Defense and the Court's Ruling
High 5 Games contended that it operates with virtual coins and is a “social casino.” The company argued that its games emulate video slot machines found in physical casinos, which they believed did not constitute online gambling. However, Judge Cartwright determined that High 5 games are prohibited under the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. The apps promoted illegal gambling by requiring players to purchase additional chips using real money, which is a fundamental aspect of their operability.
High 5 Games countered that players can use free coins given upon registration and periodically awarded, but the court observed that users cannot engage in regular gameplay without eventually opting to pay. Washington law recognizes virtual currency as a "thing of value" even if it cannot be redeemed for cash, sealing the fate of High 5's legal arguments.
Fallout and Potential Damages
High 5 Games announced that it has made efforts to cease operating in Washington following the court's decision. Cartwright ruled that the company is liable to pay damages to Rick Larsen and other plaintiffs. Larsen, a High 5 Games player, initially filed the suit six years ago. The amount of damages to be awarded will be determined by a jury, potentially marking a significant payout.
SBC Americas has reached out to High 5 Games for a response to the verdict but has not yet received a reply.
Implications for Other Gaming Companies
This verdict is not an isolated incident in Washington. A separate case involving High 5 Games, Wilson vs. PTT, LLC, remains active but has seen no progress since early 2023. Additionally, Judge Robert Lasnik ruled that online gaming companies DoubleDown Interactive and IGT also violated Washington state gambling laws. These companies offered games free to play but allowed users to purchase additional chips, thereby creating a gambling environment similar to High 5 Games.
Consumers would bet to acquire more chips, which they otherwise would need to buy, further reinforcing the state's stance on virtual currency as a "thing of value." These rulings signal that Washington is taking a hard line on any form of online gambling, making it clear to other gaming companies that compliance with state law will be rigorously enforced.
Quotes
“The undisputed material facts as to liability show that High 5’s games violate Washington’s gambling laws and the Consumer Protection Act.”