MDLs No. 2985 and No. 3001 charge Apple and Google, respectively, with distributing what the plaintiffs claim are illegal gambling apps

Why The Latest Round Of Social Casino Lawsuits Is Focusing On App Distributors Rather Than The Game Developers

Google Play and the Apple App Store are being challenged in court separately, but under the same judge, regarding allowing “social casino” or “casino-style” apps to be downloaded there. Players are alleging the apps are “illegal Internet gambling” enterprises and Google Play and the App Store are participants in that alleged wrongdoing.

Judge Edward J. Davila will oversee both the Google and Apple matters in the US District Court, Northern District of California. However, he will oversee them separately rather than as a single action – even though they concern some of the same games.

Also, while the complaint against Apple concentrates on slots-style games, the filing vs. Google claims the games in its store resembled retail casino slots, poker, blackjack and bingo.

Litigants in both cases allege the companies host illegal gambling apps, because the games take money in order to offer users a chance at more playing time. As the filing against Google states, the plaintiffs allege “paying money for the chance to win more playing time constitutes unlawful gambling.”

Online Poker Report reached out to both Google and Apple‘s press offices for comment, but neither responded.

Many settlements, but no final judgment

Similar games have been around for years. That makes it surprising that it’s still an unresolved issue. After all, this isn’t even close to the first time plaintiffs have asked courts to make this gray area more black and white.

Players outraged by everything from these social casino games to skill-based games and video games with loot boxes have already sued.

The plaintiffs say it’s gambling. Developers, publishers and distribution platforms all defend the products. No judge has settled the issue in the US because these cases tend to get settled without a final ruling.

Such settlements often run into the millions of dollars or more. In a recent example, plaintiffs settled cases against social casino defendants who then made changes to the games.

The September 2020 cases in the state of Washington could have set an important precedent had they not been settled. The judge had been considering whether play money chips could constitute a “thing of value” under Washington law. After all, they can’t be redeemed for cash or anything else tangible, yet they’re necessary to play the game. The argument in favor of them having value is that they equate to play time. That is itself something players are willing to pay for. When you add to that the fact that they have to be risked in order to play, that would make the games themselves qualify as gambling under state law.

Instead, the parties settled for $193 million and agreed to make changes to the game. Players can now self-exclude from the games, and have ways to continue playing without purchasing more chips. Yet the issue itself remains unresolved.

Going after the middleman

The current lawsuits differ from those that came before in one important way. The plaintiffs are suing the middlemen, not the developers. Apple and Google distribute the apps and take a cut, but they didn’t create the games themselves.

Both sets of complaints stress that this is big business for the distributors. The filing against Apple stated that Americans “purchased and gambled away” $6 billion in social casino virtual chips during 2020.

The scope of these lawsuits is also huge. They involve numerous plaintiffs from across the US. They also name hundreds of social casino games, rather than focusing on a few specific products.

The court will hear each case separately. That’s because “the factual questions concerning Google’s conduct in promoting the games – and its contracts with app developers – appear to be distinct from Apple’s conduct and contracts,” according to the transfer order in the Google case that was filed on June 3.

Google cases consolidated and transferred to CA court

The transfer order groups two cases against Google – one from Alabama and one from New York – into one case. Davila will oversee the new case, which has been given the title “Google Play Store Simulated Casino-Style Games Litigation.”

This case is filed with the US Judicial Panel on Multidistrict Litigation (MDL), which gave it the less descriptive designation MDL No. 3001. It will remain in the San Francisco court, despite complaints originating in Alabama and New York. Soon, cases from New Mexico and Mississippi may get lumped in as well.

The filing regarding Google added:

“Additionally, the panel has been notified of 10 related actions pending in three additional districts – the Northern District of California, the Northern District of Ohio and the Western District of Washington.”

However, the California court will remain the venue because the Northern District court is closest to Google’s Mountain View headquarters. The filing explains that the decision was made because “much of the common evidence likely is located there.”

Similarly, the Apple case – filed as MDL No. 2985 – will stay in San Francisco in order to be the closest district court to Apple’s Cupertino headquarters. That’s despite the plaintiffs in that case residing in Alabama and Wisconsin.

Distributors are responsible for marketing too

The case filed against Apple on Jan. 22, 2021, put forward the logic behind suing the tech giant, rather than the games’ manufacturers. The plaintiffs allege that Apple targets and exploits consumers who are “prone to” addictive behaviors:

“Simply put, the social casino apps do not, and cannot, operate and profit at such a high level from these illegal games on their own. Their business of targeting, retaining and collecting losses from addicted gamblers is inextricably entwined with the platforms. Not only do the platforms retain full control over allowing social casinos into their stores, and their distribution and promotion therein, but they also share directly in a substantial portion of the gamblers’ losses, which are collected and controlled by the platforms themselves.”

Google’s agreements with app developers are different enough for the cases to remain separate. Nonetheless, there’s a lot of overlap. The Google case discusses its 200 most downloaded casino-style games, most of which are also mentioned in the Apple case.

The questions of fact in the Google case are different, however. Apple’s plaintiffs focus mostly on its assistance in the games’ marketing. By contrast, the complaint against Google looks at:

  • The nature of the game play within the same 200 or more involved apps and the function of in-app purchases;
  • The nature of Google’s relationship with the third-party app developers, including Google’s process for reviewing and publishing apps;
  • Google’s financial arrangements for distributing app-based revenue from the games; and
  • Google’s alleged promotion of the apps.

What could result from the complaints

Settlements might make the plaintiffs happy, but they don’t set precedent and therefore rarely lead to widespread change. When change does happen as a result, it’s usually limited in scale. One example is the changes made to specific games as a result of the 2020 case in Washington state.

In the Apple and Google litigation, though, we may see results even before there’s a legal result. Some brands named in the suits have more at stake than others, specifically those whose business is broader than just social casino products.

For instance, the Apple complaint names Wynn Slots: Las Vegas Casino. Wynn, of course, is a casino company with both brick and mortar properties and real-money gambling app WynnBet. Its social slots product supports those businesses and is useful for building a customer database.

However, damage to the reputation of Wynn Resorts – the much more valuable overall brand from which all of the offshoots benefit – may be something Wynn is now taking into consideration. If it deems that harm to be greater than the benefit provided by Wynn Slots, it may make changes of its own accord.

None of this has dampened the overall trend of social casino gaming, mind you. New sites like Gambino Slots pop up on a regular basis.

Investors react to the lawsuits

Wynn Resorts stock was selling for $134.65 on Wednesday and fell to $129.08 on the day news of the complaint surfaced, but stock continued to fall on Friday to $128.16.

Similarly, stock for Playtika – the game developer for Caesars Casino: Vegas Slots named in the Apple suit – fell on the news. The stock that was worth $27.48 on June 2 ended June 3 at $26.04, then Friday at $25.82. Conversely, Caesars own stock didn’t take such a hit. That’s presumably because, despite the app’s name, Caesars is no longer associated with Playtika. The former parent company made headlines selling Playtika for $4.4 billion in 2016.

Sony Group, responsible for GSN Casino: Slot Machine Games, may be more concerned by news of PS5 inventory shortages than the case. GSN Games is a division of the Game Show Network, which Sony Pictures Entertainment owns, but it forms only a tiny part of the group’s overall business. Sony Group stock seemed mostly unaffected, reaching a high of $98.61 on June 2, a low of $97.33 on June 3 and closing on Friday at $100.65. Google and Apple themselves likewise showed little movement in stock prices.

OPR didn’t receive replies when contacting representatives of Playtika, Sony and WynnBet for comment.

In the end, the controversy around the legality of these social casino games may cost more in brand reputation than the money they generate for Apple and Google, even if legal gambling isn’t a core business for them like it is for Wynn. The game developers, meanwhile, will be watching carefully to find out if their games will still have a home in the companies’ respective app stores.

- Heather Fletcher is the lead writer with OnlinePokerReport. She's a career journalist, with bylines in The New York Times, Adweek and other publications. Reach her at [email protected]
Privacy Policy