Lawsuit filed against Facebook over social casino apps, allegedly working with illegal gaming firms

A master complaint has been filed against Facebook over its participation in an alleged illegal gambling conspiracy. More than two dozen consumer plaintiffs have filed the complaint in a consolidated lawsuit concerning the company’s role in a social casino enterprise.

The case against the social media giant was initially filed in April, reports Law Street Media, but a revised filing came on Monday after the court issued an order creating a leadership hierarchy for the case, setting three separate tracks against defendants Google, Apple and Facebook.

The complaint describes social casinos as highly addictive and manipulative games that may lead to financial havoc for players engaging in them. The suit further claims this form of gaming is illegal under some states’ gambling laws.

To support this last claim, the suit points to a Ninth Circuit case, which found virtual gambling chips as a “thing of value,” responsible for earning game’s creators millions of dollars. This line of argument concludes that online social casino games constituted illegal gambling under Washington law.

The complaint links Facebook to the alleged conspiracy by claiming it “holds a major (30%) financial interest by hosting the game, driving customers to it, and acting as the bank,” further reports the previously cited news source. It also calls out the social media platform for allegedly facilitating, promoting and controlling illegal slot machine games.

In their argument against Facebook, plaintiffs contend the company works together with illegal slot companies “to target and exploit high-spending users,” also known as “whales,” by enabling targeted marketing through its collection of user data.

The suit asks for an order to halt Facebook’s participation in the “Social Casino Enterprise,” and for the company to be required to return all ill-gotten profits. On behalf of 15 putative state classes and a nationwide class, the plaintiffs state claims for relief under the Racketeer Influenced and Corrupt Organizations Act, California’s Unfair Competition Law, and various state gambling and consumer protection statutes, according to legal media.

This is not the first time social casinos, which allow users to engage in games using fiat currency for more chances to play but without the chance to win real money, have been under fire. Game developers, and platforms hosting and distributing them, have been called out for exploiting a market allegedly operating under a false pretense of being non-real money games.

“Like Las Vegas slots, social casinos are extraordinarily profitable and highly addictive,” claims the lawsuit. “Social casinos are so lucrative because they mix the addictive aspects of traditional slot machines with the power of the platforms to leverage big data and social network pressures to identify a target and exploit consumers prone to predictive behaviors.”

The latest data shows that last year consumers purchased an estimated $6 billion in virtual chips while out of the top twelve grossing apps on Facebook nine are social casinos. The biggest operator, DoubleDown, is expected to generate around $400 million in chip purchases this year, according to the complaint, with Facebook and other platforms hosting the games taking a $120 million cut.