When a company acquires a different company, they often assume all of the risk associated with that company. That not only includes company debt but also may include legal disputes raised before that company was sold. Australian-based Aristocrat Leisure recently was forced to pay for the mistakes of a company they acquired.
According to reports, Aristocrat is paying A$47.4 million to settle two lawsuits against Big Fish Games. The lawsuits were over simulated gambling games offered by the Big Fish in Washington State in the United States. The games were deemed to be games of chance, which are illegal in Washington.
Aristocrat Settles Pair of Lawsuits
Australian-based Aristocrat Leisure has agreed to pay A$47.4 million to settle a pair of lawsuits brought against Big Fish Games in Washington State in the United States. Big Fish offers social media games, including social media gambling games like Jackpot Magic Slots, Big Fish Casino, and Epic Diamond Slots.
The lawsuits stemmed from complaints that social media games constituted gambling despite the games not awarding real money prizes. The first complaint came from a plaintiff that spent USD$3,000 (A$4,590) on games at Big Fish Casino. The other came from a plaintiff that spent over USD$1,000 (A$1,530) purchasing virtual chips.
“Just five months after the Big Fish acquisition, the US Court of Appeals for the Ninth Circuit ruled that Big Fish's games constituted illegal gambling in Washington state, which was followed by the two class actions.” https://t.co/I6MFUVlNHq
— Brianne Doura (@BrianneDoura) May 25, 2020
Virtual chip purchases range from $1.99 to $250 on the app. Often, players that use up their free chips cannot continue playing unless they purchase additional free money chips. This is different from online casinos in Australia or online poker rooms that often let you replenish free money or demo play pokies chips for free.
A Washington court ruled that since chips had to be purchased to continue playing on the games, this means that players are gambling with real money. As such, this constitutes the apps as games of chance, which are banned by Washington Law.
Under the settlement, Aristocrat will pay USD$31 million into a general settlement fund. An additional $124 million is coming from Churchill Downs Incorporated, the original owners of Big Fish Games. Aristocrat purchased Big Fish from CDI back in January 2018. Keep in mind that these lawsuits were filed prior to the company sale.
Washington State Has Strict Online Gambling Laws
One may find it a bit odd that a state would try and sue a company over social media games. However, Washington State has some of the strictest set of iGaming laws in the United States. They are one of the few states that have laws on the books identifying online gambling.
All forms of online gambling are illegal in Washington State. That includes online casino games, online poker, and other forms of online gambling. While the state has looked at legalizing some forms of gambling, those measures have failed to generate sufficient interest from lawmakers.
Washington’s laws are so strict that many companies that may otherwise offer games to US players will stay out of the area. Geolocation tracking software native to the programs accomplishes this. Many social media iGaming apps now prohibit play from Washington State.
The Washington State rule prohibiting online gambling is absurd – mainly because gambling is legal here in almost every other capacity. I had never heard of pull tabs before moving to Washington.
— i w a n t
(@StanwoodDolph) September 17, 2019
Washington State is not the only problematic state for gaming companies operating in the United States. Kentucky is another state with strict online gambling laws. Kentucky is famous for its stance against iGaming and made attempts to seize domains of major gambling companies in the past.
Companies must also be careful operating in New Jersey, Delaware, Nevada, Pennsylvania, Michigan, and West Virginia. Those states have regulated or recently regulated online gambling. Most offer online casino games like blackjack and online poker and prohibit the operation of iGaming except for licensed companies. As such, some social media gaming companies are also prohibiting virtual chip sales in those states.