In December, Virtual Gaming Worlds (VGW) agreed to pay $11.75 million to settle a class-action lawsuit in Kentucky.
The plaintiffs in the suit argued that VGW was nonetheless violating Kentucky gambling laws. They claim to have lost money playing these ostensibly free casino products. VGW denied any wrongdoing. However, it says it settled to avoid further legal costs and the risk of losing in court.
Background on the VGW Kentucky Lawsuit
The original plaintiff, Amy Jo Armstead, filed her lawsuit on Sep 7, 2022, against VGW Malta Ltd. and VGW Luckyland Inc.
Armstead claims she lost over $7,000 playing at Chumba Casino and Luckylands Slots. Her suit alleges that the websites lure people in with the promise of free play but require them to purchase more Gold Coins to continue playing.
According to her legal team, these products are not truly free-to-play but rather casinos by the definition of Kentucky law. Armstead claims that VGW violates Kentucky gambling laws prohibiting games of chance with real money stakes.
One notable feature of Kentucky law is the Loss Recovery Act (LRA), which entitles players to pursue illegal gambling operators to recover their losses. PokerStars ran afoul of this law for its US operations between 2006 and 2011. Its owner, Flutter, ultimately settled for $300 million after initially being on the hook for over $1 billion.
Armstead has requested that any money she and other people have lost be returned to them. In addition to paying $11.75 million, as part of the settlement, VGW has agreed to implement responsible gambling features. These include adding a self-exclusion option for players who no longer wish to play, as well as having responsible gambling information available on the site.
To ensure its products remain “free” and “not gambling” in the eyes of the law, VGW has agreed to change its game rules such that players can continue to play certain slots for free even if they run out of virtual coins.
Who’s Eligible To Receive Settlement Funds?
Some readers will likely wonder whether they’re entitled to part of the settlement money. The eligibility requirements for being part of the class are as follows:
- Resident of Kentucky
- Played at either Chumba Casino or Luckyland Slots between Mar 17, 2017 and Mar 17, 2022
- Spent more than $5 in any 24-hour period on one of those sites
Anyone meeting those criteria is eligible to receive a share of the Settlement Fund. The amount will depend on the individual user’s spending history and how many other people file claims.
The deadline to file a claim is Mar 6, 2023. Those who do nothing will not receive a portion of the settlement but will have also forfeited their rights to sue VGW separately. To retain those rights would have required actively opting out of the settlement, but the deadline to do that has already passed.
About VGW and the Social Casino Model
VGW traces its origins back to 2010 in Australia. The company launched Chumba Casino in 2012 and found further success in 2017 with Global Poker, a sweepstakes poker website. It brought the Chumba brand to the US market the same year.
In 2018 VGW launched another slot-exclusive website, Luckyland Slots. VGW develops all its games in-house, though the themes are similar to those in real-money online casinos.
Social casinos or promotional sweepstakes casinos allow players to play free casino-style games. They award real money cash prizes using a sweepstakes model. Players purchase Gold Coins, which can’t be redeemed or cashed out and are just for fun. However, each purchase awards free Sweeps Coins. Players can exchange these for prizes or play casino games with them in an attempt to earn more.
Technically, this makes the products legal in most states, as sweepstakes are a matter of federal law. However, there have been numerous challenges in recent years to the legality of free-to-play slots, whether using the sweepstakes model or not. These have always ended up in settlements between the parties involved, so the issue has never reached a final ruling in court. VGW has adjusted the specifics of its product and messaging over the years to remain on the right side of the law.