Roblox Sued for Role in Alleged Illegal Gambling on Bloxflip & Other Third-Party Sites

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An increasing number of third-party websites have begun letting Roblox players risk their in-game “Robux” currency on games of chance, sparking a proposed class action lawsuit from concerned parents. The suit targets the Roblox Corporation as the game’s developer plus the owners of three of the casino-like third-party websites.

The plaintiffs include two unnamed minors and their mothers, Rachelle Colvin of California and Danielle Sass of New York. They seek class status to represent all other US Roblox users who have suffered losses through the alleged illegal gambling.

The sites named in the suit and their owners are:

  • Bloxflip (Studs Entertainment Ltd.)
  • RBXFlip (Satozuki Limited B.V.)
  • RBLXWild (RBLXWild Entertainment LLC)

Bonus has confirmed that Bloxflip and RBXFlip continue to do business as the suit describes. RBLXWild is offline, having been acquired by a fourth site using the same model: Bloxmoon. A message to users says that updates to the site will be completed by the end of August.

Roblox doesn’t officially endorse any of these products. However, the third-party operators rely on in-game transfers of Robux to handle their deposits and withdrawals. Roblox Corp. also takes a share of any transfers of Robux and an even larger piece when a game developer exchanges Robux for payments in real-world currency.

Based on those factors, the suit alleges that:

Roblox works with and facilitates the Gambling Website Defendants’ use of its website to offer illegal gambling opportunities to minor users. Roblox could, of course, prohibit and/or stop the Gambling Website Defendants from utilizing the Roblox ecosystem and digital currency to facilitate illegal gambling but it does not. This is because Roblox is significantly enriched by this illegal scheme.

Roblox has faced intense criticism for its allegedly lax policing of third-party content in light of its young audience, with roughly half of users being under 131. This latest complaint is only one of ten federal lawsuits Roblox Corp. has faced, five of which are still active.

How Does Robux Gambling Work?

Roblox isn’t so much a game as it is a virtual world where users can create their own games and other content. This simultaneously provides its appeal and the most common source of backlash.

It has been around since 2006, so its most loyal users are no longer children. Over time, more content for adults has appeared, and Roblox has even considered allowing in-game simulated gambling on its platform. However, even in areas of the game that are intended for younger audiences, users keep saying they’ve found content that shouldn’t be there.

One particularly troublesome aspect of the system is that users can exchange Robux, and content creators can cash out such “earned” Robux for real money. This is necessary to motivate content creators to produce high-quality work. However, it creates a whole, largely unregulated economy in the game. And digital currencies with real-world value are a magnet for bad actors of one form or another.

The third-party Robux casinos work like this:

  1. The user creates an account on the casino site and provides their identity within the Roblox world.
  2. On Roblox, they purchase Robux and spend them on in-game content offered by the casino owner.
  3. The casino operator credits them with an equivalent amount of Robux on the casino site, less Roblox’s 30% commission on Robux transfers.
  4. Cash-outs follow the same process in reverse. “Withdrawing” from the site results in the player’s Roblox character being awarded in-game items or Robux by the casino owner.

Although all the sites follow that basic model, they have some differences.

Bloxflip

Bloxflip mostly lacks traditional casino games. Instead, it allows players to risk their Robux on a variety of novelty games based on video games and carnival attractions. These include variations on Plinko, Minesweeper, loot boxes, and even a player-versus-player “guess-the-cup” game. Naturally, there is also a crash game, a genre popularized by unregulated cryptocasinos.

It advertises that players can potentially win up to 1 million Robux, which would cost $10,000 to purchase with real money. (Large purchases of Robux follow an exchange rate of 100 Robux to $1, although smaller purchases have a less favorable rate).

RBXFlip

RBXFlip has a more limited array of games than Bloxflip – just a simple coinflip and a stripped-down, Roblox-themed variation of roulette. However, the business model is more sophisticated in that it also includes an item store, allowing players to exchange their winnings for in-game cosmetics for their Roblox character rather than cashing back out. There is also an option to stake such items on the outcome of a game rather than betting with Robux.

RBLXWild/Bloxmoon

RBLXWild has been offline since its acquisition by Bloxmoon. A message on the site assures users that it is working on re-enabling withdrawals and that, in the meantime, they can transfer their balances to Bloxmoon. However, it gives no indication of how to do so and crypto news site CoinMarketCap reports that users have been unable to access their accounts, some of which contain as much as 400,000 Robux.

This is one of the dangers of unregulated gambling, of course. User balances are never guaranteed, and there’s no one to complain to when they go missing.

As for Bloxmoon, its array of games is wider than the other sites and includes more traditional casino options like blackjack. It also has by far the most aggressive and concerning approach to marketing among the sites examined by Bonus. Users who refer friends to the site can earn a percentage of those friends’ wagers. Additionally, YouTube streamers promoting the site can earn $2 per 1000 views those videos get.

Why is Roblox Being Sued for Third-Party Casinos?

The case as it applies to the casino owners appears straightforward, though locating the defendants may not be. Studs is registered in Cyprus, while Satozuki is in Curaçao. Before its sale, RBLXWild was registered in Delaware, but Bonus has been unable to determine who owns Bloxmoon or where they’re located.

If there is a debate about the legality of the third-party products, it will have to do with whether Robux and in-game items are a “thing of value.” This is usually the point of contention in most legal battles over gray-market gambling products. When it comes to social casinos, it’s an unanswered question. However, such a defense would be complicated in the case of Robux by the fact that Roblox pays developers real money for the Robux they earn.

By contrast, social casino play money is a one-way transaction. Even those that use the sweepstakes model are careful to keep the chips that are redeemable for prizes separate and distinct from those available for purchase.

For Roblox Corp, the question is different. Although its legal team hasn’t filed a response, it will likely argue that it isn’t responsible for the other defendants’ actions.

The complaint emphasizes that Robux never actually leave the Roblox site. Throughout the gambling process, Roblox holds the virtual currency and, by the suit’s logic, is responsible for what’s being done with it. The complaint states:

Importantly, while a minor user must navigate off Roblox’s website to access the online casino and their new digital gambling credits, in reality the minor user’s Robux have not been converted to another currency and they never leave Roblox’s website. Instead, the Gambling Website Defendant merely take control of the Robux, while providing a corresponding number of “credits” (which are also called Robux) on their third-party gambling websites.

How Much Does Roblox Take From Gambling Transactions?

Roblox also pockets the lion’s share of the money that passes through the game’s economy. The 30% commission mentioned in the suit actually understates this. Roblox takes 30% of each transfer of Robux between users. However, the exchange rate offered to developers for their earned Robux is only 35% of their purchase price. For instance, developers can exchange 100,000 Robux for $350, but those Robux would have cost the original owners at least $1,000 to purchase.

Adding the 30% commission, Roblox users would need to spend at least $1,428 on Robux for every $350 cashed out by a third-party content creator. That’s assuming the Robux go directly from the purchaser to the content creator, who cashes them out immediately. The ratio would be even higher if the same Robux passed back and forth or through multiple hands first.

The plaintiffs argue that Roblox is guilty of negligence in enforcing its content policies. They also insinuate that it is motivated by the “extraordinary profits” it reaps by ignoring the problem.

Echoes of Skin Gambling in CounterStrike

Roblox isn’t the first online game to experience this problem. The use of in-game currencies or items for third-party gambling comes up whenever companies allow player-to-player exchanges. Many games, especially those targeting children, prohibit such transfers for that reason. When currency and items are locked to a single account, there’s far less potential for abuse.

The most famous example of gambling with in-game items is the skin gambling industry that arose around Valve’s Counter-Strike: Global Offensive. It’s currently experiencing a resurgence because of the news that items from the game will be transferrable to its upcoming sequel, Counter-Strike 2. Gambling with World of Warcraft “gold” is another related phenomenon.

Despite multiple suits, Valve has managed to avoid any finding of liability relating to skin gambling. However, it has also been actively fighting against it since 2016, when it issued a cease-and-desist to skin gambling sites in the face of backlash.

Notes

  1. The suit claims that “over half” of Roblox users are under 13. However, CEO David Baszucki told The Verge in 2022 that this was no longer the case. Data published by Statista likewise purports to show that over half of daily average users have been over 13 since the second half of 2021.
About the Author
Alex Weldon

Alex Weldon

Alex Weldon is an online gambling industry analyst with nearly ten years of experience. He currently serves as Casino News Managing Editor for Bonus.com, part of the Catena Media Network. Other gambling news sites he has contributed to include PlayUSA and Online Poker Report, and his writing has been cited in The Atlantic.
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