Australian poker machine manufacturer Aristocrat Leisure has agreed to pay US customers who lost money on ‘virtual chips on the developer’s smartphone casino games a total of $US31 million ($47 million.)
This concludes a process that saw the blue-chip company facing off against two class-action lawsuits arising from its Big Fish Digital gaming division, a two-year-old $1.3 billion acquisition that produces digital blackjack, poker, and slot games.
Online gambling is still illegal in many US states; however, Aristocrat’s games are free to download with users purchasing virtual gaming “chips” to use for wagers.
Barely 6 months following the Big Fish acquisition, had the US Court of Appeals for the Ninth Circuit ruled that Big Fish’s games constituted illegal gambling in Washington State, which eventually led to the filing of the two class actions.
Aristocrat disclosed that it had reached a provisional agreement that would allow it to settle both cases for a combined $US155 million ($236 million) the liability would be split between Aristocrat paying $US31 million and Big Fish’s previous owner Churchill Downs Incorporated (CDI) paying the remaining $US124 million.
Manasa Thimmegowda a lead plaintiff in one of the cases testified that she first started playing Big Fish Casino on her iPhone in 2017 and lost more than $3000 in real money after buying virtual chips.
“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,” the document states.
The legal action was geared towards recovering money that players lost on Big Fish Casino, Jackpot Magic Slots, and Epic Diamond Slots as well as lawyers’ fees and punitive damages on behalf of the three individual plaintiffs and as part of a nationwide settlement class action.
In an official statement, Aristocrat said that the settlement was reached following mediation between Aristocrat, Big Fish, CDI, and the plaintiffs but is still subject to approval by the US Federal District Court for the Western District of Washington.
The ruling reached by the US Court of Appeals that determined Big Fish games is illegal in Washington pivoted on whether the virtual chips had any actual value. The chips, which cost between $1.99 and $250 could not be exchanged for cash, however, the court noted users would have to keep buying more chips to continue playing Big Fish games this helped the court determine that the chips are a “thing of value”.
Aristocrat’s digital division is responsible for popular video games like War of Clans and RAID: Shadow League brought in just over $1 billion in a six month period to March 31, 2020, putting it on par with the company’s poker machine business.
Aristocrat’s full-year profit for 2019 was $752 million full-year profit in 2019 and the company has been open about the negative effects on its poker machine business brought about by the Coronavirus and the shutdown of casinos and pubs. The upside for the company is that more people have had to make use of its digital products.