A U.S. District Court judge recently approved a class-action settlement involving South Korea-based DoubleDown Interactive LLC and International Game Technology (IGT) worth $415 million. The plaintiffs in the case alleged that DoubleDown Casino’s online operation in Washington violated state law by providing illegal gambling to residents.
Washington is among a handful of U.S. states where all forms of sports betting and casino gambling are illegal. This includes social casinos like DoubleDown, which are different from real-money online casinos because users can play for free using virtual currency. However, many of these operators will sell the virtual currency to users that want to purchase them to continue playing.
Social Casinos are Legal Across the Country
In most states, because social casino users can play for free, it’s enough for these providers to avoid regulation and any online gambling prohibitions. However, DoubleDown will likely prohibit residents from playing its games in the future. Mostly all online social casinos exclude players in the state because of its strict anti-gambling laws.
Because games from IGT and the DoubleDown website in Washington are free to play, the companies argued that their activity falls outside Washington State Gambling Commission regulation because players can’t win real money. However, according to the class-action lawsuit, tens of thousands of members say they purchased and lost chips, with lawyers arguing the plaintiffs are entitled to pursue those losses by law.
While players couldn’t redeem virtual coins at DoubleDown Casino for cash in Washington, other states where social casinos operate allow players to redeem “sweeps coins” for real money and prizes like gift cards from national retailers. They can also request free virtual coins by mail, which puts them under the jurisdiction of U.S. Sweepstakes laws and not state gaming regulators.
Companies Deny Liability
U.S. District Judge Robert Lasnik said the resolution of the four-year-long case was adequate, reasonable, and fair. Seven members of the original class-action lawsuit opted out of the settlement before the case concluded, meaning the remaining members will likely receive awards in the hundreds of thousands of dollars.
However, as part of the settlement, both IGT and DoubleDown Interactive weren’t required to assume liability for the alleged gaming violations, with lawyers arguing that the claims filed by the plaintiffs were based on unclear interpretations of Washington State gaming legislation.
Instead, both companies agreed to pay the $415 million settlement, with IGT paying most of the funds. IGT will contribute $269.75 million, while DoubleDown will cover the other $145.25 million.
IGT acquired Seattle-based DoubleDown Interactive in 2012 for $500 million, with the social casino site quickly gaining popularity on Facebook while offering players a chance to play casino games for fun with no purchase necessary. IGT went on to sell DoubleDown to a South Korean company, Double U Games, for $825 million in 2017 but continued to provide the gaming software for the social casino.
Attorneys from the Chicago-based legal firm handling the litigation, Edelson, were also awarded $121.5 million in legal fees as part of the settlement. Judge Lasnik decided to heavily compensate the law firm because he says the litigation was “risky, novel, and hard-fought,” justifying the percentage of settlement funds that should go to the plaintiff’s attorneys. This leaves more than $292.5 million to be divided among the remaining class members.
Attorney Todd Logan from Edelson confirmed that court action against social casinos has resulted in over $650 million in settlements for class members and individual clients.
Last Updated on by Ryan
