The past and current owner of Seattle-based Big Fish Games will pay $155 million to recover payments made by users of its social casino games after a judge on Monday granted preliminary approval of two class action settlements.
The legal dispute dates back to 2015 when Cheryl Kater sued Big Fish’s then-parent company Churchill Downs. The suit argued that Big Fish violated Washington state law governing online gambling because chips used in its “freemium” game Big Fish Casino represented “something of value.”
In 2016, a U.S. District Court judge in Seattle threw out Kater’s complaint. But two years later, a federal appeals court ruled that Big Fish Casino constituted illegal online gambling, according to Washington state law.
Kater is listed on the settlement as a plaintiff, along with Suzie Kelly and Manasa Thimmegowda.
Churchill Downs and Aristocrat Technologies are listed as defendants. Churchill Downs acquired Big Fish Games for $885 million in 2014, and sold it to Aristocrat in 2018 for nearly $1 billion.
Churchill will pay $124 million of the settlement, while Aristocrat will pay the remaining $31 million.
The settlement could have major implications for the casual games market as many popular games use in-app purchases as a revenue driver. Several other lawsuits were filed in the wake of the federal appeals court decision, challenging the legality of social games in Washington.
Washington lawmakers earlier this year debated legislation that would shield many of the state’s smartphone game companies from class-action gambling lawsuits. However, the bills did not advance beyond initial discussion.
As part of the settlement, Big Fish has agreed to “establish a voluntary self-exclusion policy that will allow players to exclude themselves from further gameplay, make available resources related to video game behavior disorders, and change the game mechanics of its apps so players who run out of virtual chips can continue on in the game they are playing without buying chips,” according to the settlement filed in the U.S. District Court for the Western District of Washington.
The payout amount will be based on how much each person lost while playing Big Fish Casino, Jackpot Magic Slots, and Epic Diamond Slots.
Big Fish Casino is a series of games like slots, blackjack, and roulette that use virtual chips. We’ve followed up with Big Fish about changes to its games as a result of this settlement, and will update this story if we hear back.
Founded in 2002, Big Fish has an additional office in Oakland, Calif. The company was previously led by former president Jeff Karp, who just joined Electronic Arts. It cut about 15% of its workforce in September 2018. Big Fish has more than 600 employees, according to LinkedIn.
(Hat tip to Venkat Balasubramani)
(Editor’s note: The headline was updated to reflect Big Fish Games’ involvement in the lawsuit)
