DoubleDown Backs Down on Lawsuit as Court Approves $415M Settlement

While DoubleDown Interactive (DDI) owner International Game Technology (IGT) did not admit any fault, the plaintiffs’ victory may encourage others to seek similar legal action. Such an outcome could significantly hamper IGT’s recent focus on the social gaming space. The settlement also marks a significant development in the legal landscape surrounding online gambling, highlighting the need for clear social gaming regulations. 

The Court Deemed the Settlement Fair and Reasonable

The class action lawsuit, initially filed in 2018, alleged that IGT-owned DoubleDown Casino offered virtual casino games that constituted illegal gambling under Washington state law. Plaintiffs Adrienne Benson and Mary Simonson argued that the virtual chips used in the app had monetary value and could be purchased with real money, creating a form of unlicensed and unregulated gambling.

Consumers visiting… for the first time are awarded one million free chips. These… offer a taste of gambling and are designed to encourage players to get hooked and buy more chips for real money.

Benson v. DoubleDown

In August 2022, DDI and IGT eventually agreed to a $415 million class action settlement. The court has thoroughly reviewed the case, mandating that the agreement between the two parties was fair, reasonable, and adequate. US District Judge Robert Lasnik mandated that the plaintiffs’ attorneys had won a “risky, novel, and hard-fought” legal victory, awarding them $121.5 million of the overall settlement amount. 

The remaining $292.5 million will be distributed to several thousand class action members who played DoubleDown’s games on or before 14 November 2022. Affected individuals could submit their claims by 11 April 2023 and should soon receive their compensation. However, they are also prohibited from seeking further legal action regarding the case.

The Case Highlighted the Rising Concerns about Social Gaming

DDI and IGT deny all claims and that they violated any laws. The settlement agreement was motivated by a desire to avoid the uncertainties and expenses of continuing the case. However, the decision to back down from such a high-profile lawsuit raises significant concerns regarding the stability of similar social gaming platforms.

While social gaming platforms claim virtual casinos only serve entertainment purposes, the blurred line between virtual currency and real money continues to raise uncomfortable questions for operators. Such services currently exist in a regulatory gray area, meaning consumers may be more at risk than with traditional iGaming.

The recent settlement demonstrated how the regulatory uncertainty around social games could also negatively impact operators. The matter can have significant consequences for companies like IGT, which continues its substantial investments in the social gaming space. Industry stakeholders, regulators, and legislators must collaborate to establish a comprehensive framework that protects consumers and ensures compliance with state gambling laws.