Facebook is an illegal gaming operator. That’s the assertion of three individuals who have joined forces to sue the social media giant. They argue that the platform, by allowing social casino advertising and apps, is actively – and illegally – involved in the gambling industry and want accountability. This isn’t the first time that the legality of social gaming has been raised and it certainly won’t be the last. Google and Apple have both come under fire for the same reason.
Facebook Not Playing By The Rules
According to the lawsuit, filed in the Northern District of California last Friday, Facebook is participating in an “illegal internet gambling enterprise” by allowing social casinos through its website and app. The plaintiffs point out that, of the top 12 grossing apps available through Facebook, nine are social casinos that offer virtual slot machines and other types of gambling. They argue that Facebook earns 30% commission on all paid wagers made through the apps and that it operates as a payments platform for the social casinos.
Facebook, Google and Apple are “smuggling” slot machines onto consumers’ devices, according to the suit, and are in violation of gambling laws in several states. Because the platforms “retain full control over allowing social casinos into their stores, and their distribution and promotion therein,” they are fully responsible for the activity and, as such, are as guilty as the app providers. The plaintiffs, represented by the Edelson PC law firm, which has “taken on some of the biggest companies and law firms in the world and has had success where others have not.”
The Lawsuit Stands On Questionable Grounds
The lawsuit accuses Facebook of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act and California’s Unfair Competition Law. The debate over the status of social casinos has lingered for years and there has yet to be clear guidance on their existence. The majority of these social casinos allow users to purchase virtual money to play, even though they can never cash out any winnings. However, in almost all circumstances, it is possible to play and win the virtual money, which can be used for additional play, without having to make an investment.
Because no investment is obligatory, the onus then falls on the individual and his or her prerogative to proceed. According to Thomson Reuters Practical Law, “To be legal under current state law, social gaming must therefore not require consideration [an investment], be a game of skill, or not offer a prize. Many game developers and operators offer social gaming in the state of California either as games of skill or free of charge.”
In the Facebook lawsuit, the plaintiffs admit to having spent money to play, despite no obligation to make a monetary deposit. One of the plaintiffs emphasizes a particular app available through Facebook that she spent five years playing and that app has a number of options available to earn free play without an investment. It will be difficult to find support under the argument that Facebook has violated the RICO act since there is no obligation to play the app or make an investment, but the plaintiffs are hopeful, anyway. They’re asking for “declaratory judgment in their favor; to enjoin Facebook from further illicit conduct; restitution; disgorgement; an award for damages, costs, and fees; an injunction; and other relief.”