Apple, Google, and Meta have asked a US District Court judge to toss a class action targeting the tech giants. According to the lawsuit, the Silicon Valley titans illegally conspired with social casino operators to target vulnerable gamblers for a share of the resulting profits. The tech companies’ defense is, in essence, that because the games lack cash prizes, they are merely simulated gambling in the same way a video game about football is not the same thing as playing football. They also say that the transactions they facilitated were purchases of virtual currency, which had potential uses other than the virtual casino games.
During a March 7 appearance in San Jose’s division of California’s Northern District Court, the companies primarily argued that Section 230 immunity provided legal cover. As a result, the trio asked the Hon. Edward J. Davila to dismiss the cases with prejudice.
Both sides appear to be entrenched in their positions and simply waiting to see where the court’s opinion falls. As Meta’s lawyers put it in the defendants’ most recent legal filing:
Plaintiffs’ Opposition has little to say in response to Meta’s bases for dismissing the California law and RICO claims. What they do say only confirms that their claims should be dismissed…
The Court should dismiss the Complaint with prejudice.
Plaintiffs ask court to deny dismissal request
According to the plaintiffs’ expansive multi-district case, the defendants’ actions violated both federal law and state-level gambling and consumer protection legislation.
Courthouse News Service (CNS) reported that the tech companies argued against the suit’s claims that social app activity constitutes gambling. They also disputed the accusations that commissions earned on in-app purchases equate to a cut of operator “winnings.”
Playing social casino games does not equate to gambling, said Meta representative Christopher Chorba of Gibson, Dunn & Crutcher during the appearance.
Playing these games no more makes me a gambler than playing [an NFL video game] makes me a football player.
Todd Logan of Edelson PC, who represented the plaintiffs at the hearing, told the court his clients remained adamant.
With names like ‘Infinity Slots’ and ‘Lots of slots,’ it’s very clear what’s going on here — chips are being bought and sold in front of a slot machine.
The plaintiffs’ most recent brief asked the court to deny the trio’s dismissal request. If not, they requested dismissal without prejudice, permitting the effort to continue with an amended complaint.
For all the foregoing reasons, the Court should deny Apple’s, Google’s, and Meta’s Motions to Dismiss in their entirety. In the alternative, should the Court dismiss any of Plaintiffs’ claims, it should do so without prejudice and with leave to amend.
Defendants argue they simply ‘facilitate’ transactions
The defendants primarily relied on Section 230 of the Communications Decency Act (CDA) for their defense from the suits’ accusations. The law—which shields online companies from third-party content liability—prevents online publishers from those who feel wronged by online posts.
The trio also railed against an earlier court assessment associating their social casino business with that of a “bookie.” Instead, they argued they operate more like a credit card company that processes payments separately from the social casino apps.
And such payments are not prohibited, Google’s legal representative Teresa Michaud of Cooley LLP reminded the court.
There is no statute saying that processing payments for virtual currencies is unlawful.
Indeed, if the case continues, they argue that the decision will allow liability lawsuits targeting VISA and MasterCard for purchases made.
Further, Michaud argued that buying virtual chips didn’t mean users would necessarily gamble with them.
Within the games at issue, there are transactions that do not constitute illegal gambling, like gifting in-game currency to other players or playing bingo.
When challenging the counts related to state gambling laws that allow recovery of losses from winning parties, the trio argued they were not “winners.” As such, they said they are not legally responsible under the applicable statutes.
Representing Apple, Colin McGrath of DLA Piper told the court their 30% commission doesn’t constitute “winnings” either.
It’s not profit-sharing. It’s simply facilitating a transaction.
Despite these arguments, Logan said the defendants are simply re-classifying their activity.
We can use any number of terms. They are selling chips and buying chips.
Time frame for judge’s ruling remains unclear
The amended legal complaint, initially launched in mid-2021, involves 26 plaintiffs, 19 states, and several separately filed lawsuits.
The Plaintiffs jointly argue that social casino apps constitute an “illegal internet gambling enterprise” worse than even brick-and-mortar casinos. The difference, they’ve said, is the platforms’ detailed consumer data makes the games “extraordinarily profitable and highly addictive.”
Previously, the Ninth Circuit heard an appeal of an earlier motion to dismiss.
In this instance, Judge Davila did not indicate when his ruling would come.
In the meantime, Bonus could not reach the defendants or plaintiffs for comment.
About the Author
