Aristocrat Agrees to Settle with Plaintiffs, Pending Federal Court Approval

Aristocrat, the manufacturer of gaming machines, announced today it reached a principle agreement for the settlement of the two lawsuits against the company in Washington State, relating to the social games provided by Big Fish Games, a 2018 acquisition from Churchill Downs Inc. The agreement remains subject to approval by the US Federal District Court for the Western District of Washington.

Big Fish “Got Caught”

Australian company Aristocrat Leisure Limited agreed to a total settlement of $155 million, split $31 million to $124 million for Aristocrat and Churchill Down, to be placed in a settlement fund, to provide for money lost and reasonable lawyers’ fees, claimed from the plaintiffs on behalf of themselves and a nationwide settlement class. Aristocrat is releasing the former owner of Big Fish Games, Churchill Downs, from any indemnity regarding the two class action lawsuits.

The lawsuits allege the Australian owner of Big Fish Games, the gaming arm Aristocrat acquired for $990 million in January 2018, that the social games available on its platforms Big Fish Casino, Jackpot Magic Slots and Epic Diamond Slots constitute games of chance which are prohibited by Washington law. The three plaintiffs that initially filed the lawsuits claim they have lost money while playing on their phones, as despite playing with virtual chips, the games have the option to buy virtual chips for real money.

“By operating Big Fish Casino and other similar online gambling games, defendants have violated Washington law and illegally profited from tens of thousands of customers”

Official court document

The ruling issued by the US Court of Appeals stated that whether the aforementioned games could be deemed as games of chance hinge on the concept of value for the virtual chip, and although the chips cannot be exchanged for cash, users must buy more of them to continue playing when they ran out of chips, which implies a chip is deemed a “thing of value”.

As part of the reached settlement agreement, all members of the nationwide settlement class who do not exclude themselves would provide releases of claims relating to the subject matter of the lawsuits.

Aristocrat Remains Financially Strong

The settlement of the two class action lawsuits against the company comes during times when Aristocrat implemented significant job cuts to trim costs, issuing an update for the Australian Stock Exchange (ASX). Despite having its poker machines business impacted severely by the closure of casinos and clubs, lockdowns pushed people towards online gambling and Aristocrat’s digital games.

In May, the company posted strong operational performance for the half year ending March 31, as well as financial strength to support its long-term growth plans.