Game Show Network is facing an online gambling lawsuit, the latest in a flurry of such cases to pop up in Seattle-area courts in the last few weeks.
Most people think of GSN as the place to watch new game shows and old favorites from their childhood, but its games division has become one of the biggest publishers of free casino offerings. Those games are at the heart of the lawsuit filed earlier this week in U.S. District Court in Tacoma by Elise Bell, alleging they constitute illegal online gambling under Washington state law.
The lawsuit alleges Bell lost $700 on the company’s casino games, which are advertised as free. GSN offers a series of games typically found in casinos, like slots and blackjack, that use virtual tokens. The tokens have no monetary value themselves, but players can only play as long as they have tokens. If they run out, they have to wait until the game offers more free tokens or they can buy hundreds of thousands of tokens for a couple bucks and jump back in.
The lawsuit alleges the tokens represent “something of value,” a vague clause within Washington state law governing gambling. The tokens have value, the suit argues, because they are vital to continue playing the game.
“Defendant’s online gambling games are illegal gambling games because they are online games at which players wager things of value (the tokens) and by an element of chance (e.g., by spinning an online slot machine) are able to obtain additional entertainment and extend gameplay (by winning additional tokens),” according to the suit.
A federal appeals court ruling against the parent company of casual gaming heavyweight Big Fish Games in March seems to have opened up the floodgates for lawsuits against online casino publishers. Counting this case, at least six lawsuits have been filed in U.S. District Court in Seattle and Tacoma since early April against gaming companies Huuuge Games, DoubleDown Interactive, High 5 Games, Scientific Games and Playtika.
All of the plaintiffs are seeking class action status, and the same firm is representing each of them: Tousley Brain Stephens. In each of the lawsuits the plaintiffs rely on the “something of value” clause as a primary argument.
We’ve reached out to the law firm and GSN and will update this story if we hear back.
RELATED: Big Fish Casino video game constitutes illegal online gambling, federal appeals court rules
All of the other cases are still in the early going, so it is unclear if the “something of value” clause will be a winning claim. However, it did prove to be an important part of the successful argument against Big Fish parent Churchill Downs in federal appeals court.
“Without virtual chips, a user is unable to play Big Fish Casino’s various games,” Judge Milan D. Smith of the Ninth Circuit of U.S. Court of Appeals wrote in his opinion in March. “Thus, if a user runs out of virtual chips and wants to continue playing Big Fish Casino, she must buy more chips to have ‘the privilege of playing the game.’ Likewise, if a user wins chips, the user wins the privilege of playing Big Fish Casino without charge. In sum, these virtual chips extend the privilege of playing Big Fish Casino.”
Online gambling lawsuits are fairly common, from small mobile game-makers to gaming giants like Valve. The game companies have come out victorious in past cases, but the Big Fish ruling last month was an exception and a breakthrough for the other side.
That case remains ongoing as Churchill Downs has petitioned for a re-hearing of its case in front of the appeals court.
Casual games, with simplified tasks and controls to make them appeal to large audiences, are a huge business. The lawsuits cite a figure from JP Morgan saying that these free “games of chance generated over $3.8 billion in worldwide revenue,” in 2016, with expected growth of 10 percent annually.
A lot of popular games today use in-app purchases, like buying chips, as a revenue driver, and the lawsuit against GSN describes the psychological effects of these transactions as similar to what people experience in casinos. This association has, the lawsuit argues, caused many governments to outlaw these kinds of games, but no such laws exist in the U.S.
“The similarity between micro-transaction based games of chance and games of chance found in casinos has caused governments across the world to intervene to limit their availability. Unfortunately, such games have eluded regulation in the United States. As a result … Defendant’s online gambling games have thrived and thousands of consumers have spent millions of dollars unwittingly playing Defendant’s unlawful games of chance.”
Here is the full lawsuit against GSN: