Summary of Legal Rulings on High 5 Apps
After an extended legal battle, two mobile applications developed by High 5 Games have been declared illegal in Washington state. A federal judge, Tiffany Cartwright of the Western Washington District Court, ruled that both High 5 Casino and High 5 Vegas fall under the category of online gambling, which is explicitly prohibited by Washington law.
Legal Definition of Online Gambling
Washington state classifies online gambling as any activity requiring users to stake value on the outcome of a game of chance or an event that offers a prize based on a certain outcome. This stringent regulation has led many gaming operators, including those offering social gambling platforms, to steer clear of the state.
High 5’s Defense Argument
High 5 Games contended that their operations involve virtual coins and should be categorized as a "social casino." According to the company, their games simulate video slot machines found in physical casinos and, therefore, should not be classified as online gambling. However, Judge Cartwright disagreed with High 5's defense.
Judicial Findings
Cartwright determined that High 5 Games' applications are in violation of the Washington Consumer Protection Act and the Recovery of Money Lost at Gambling Act. The ruling was a result of a legal suit filed six years ago by Rick Larsen, a player of High 5 Games. The lawsuit argued that the apps promoted illegal gambling because players were required to purchase additional chips using real money.
Virtual Currency as a “Thing of Value”
One of the key points against High 5’s argument was Washington's recognition of virtual currency as a "thing of value" even if it cannot be redeemed for cash. High 5 defended itself by stating that players could use free coins given upon registration and periodically awarded, but Cartwright found that users could not play consistently unless they were willing to make financial expenditures.
Impact on High 5 Games and Penalties
In response to the verdict, High 5 Games has stated that they are making efforts to cease operations in Washington. However, Cartwright has ruled that the company is liable to pay damages to Larsen and other plaintiffs involved in the case. The exact amount of damages will be determined by a jury.
Reactions and Company Response
As of now, SBC Americas has not received any response from High 5 Games on the court's verdict. Meanwhile, another legal case involving High 5 Games, Wilson vs. PTT, LLC, remains active but has seen no progress since early 2023. This indicates that the legal challenges for High 5 are far from over.
Broader Implications for the Gaming Industry
It’s worth noting that High 5 is not an isolated case. Judge Robert Lasnik ruled that online gaming companies DoubleDown Interactive and IGT also violated Washington state gambling laws. The games offered by these companies were free to play but included options where users could pay for additional chips, thereby wagering to acquire more chips that they would otherwise need to buy.
This recent ruling reiterates that Washington state maintains a stringent stance against online gambling, even when it is conducted under the guise of social gaming. This legal framework creates a challenging environment for gaming companies, necessitating them to tread carefully to avoid violating state laws.
In conclusion, the ruling against High 5 Games exemplifies the regulatory hurdles faced by online gaming companies in Washington. With courts ready to classify virtual coins as a "thing of value" and apply gambling laws accordingly, operators may need to reassess their business models to comply with state regulations. As the legal landscape continues to evolve, it will be crucial for these companies to remain vigilant and adaptive to avoid similar legal pitfalls.