$201 Million Amazon Settlement Lets Social Casino Users Seek Refunds

Amazon has agreed to a proposed settlement of a class-action lawsuit that accused the tech conglomerate of conspiring with social casino app developers to operate illegal forms of online gambling.

Pending a federal judge’s approval of the settlement terms, Amazon and the proposed class, led by plaintiff Steve Horn, a Nevada resident, will resolve the case that involves allegations that the company made many millions of dollars by allowing illegal gambling apps available for download within its Appstore.

The proposed resolution includes a $201,355,607.75 Covenant Judgment against Amazon, which represents an estimated 30% of the class members’ spending on the social gaming apps.

Washington-based Amazon, however, won’t be writing a check for the more than $201.3 million settlement. Instead, Amazon is permitting the class’s counsel to pursue refunds and reimbursements from the social casino app developers.

“In other words, under the proposed settlement framework, Class Counsel will step into Amazon’s shoes to pursue financial recovery from the developers themselves, enforcing the developers’ contractual obligation to indemnify Amazon for the portion of the Covenant Judgment attributable to the Class’s spending on that developer’s applications,” the proposed settlement specifies.

The agreement provides incentives for developers to “participate” and “pay their pro rata share of the covenant judgment, including a quick, voluntary settlement of the indemnification claims.”

No Fault Admitted

Horn’s attorneys claimed that Amazon, by allowing its Appstore to offer social casino apps, had violated Washington’s gambling and consumer protection laws.

While the apps in question do not facilitate real money gambling, they provide users with in-app purchases to keep playing once their free allotment of credits runs dry. The money used for the in-app purchases cannot be won back.

In the settlement, Amazon does not concede wrongdoing, but also does not oppose plaintiffs seeking financial relief.

This settlement will allow us to continue offering choice in our Appstore while requiring developers to make changes that improve the customer experience.”

Amazon, Inc.

“Apps within our Appstore must comply with applicable laws, and we retain the ability to remove any app at any time,” the release added.

2018 Social Gaming Decision

The case against Amazon and its social gaming apps was filed in Washington because Amazon’s headquarters are there and because of a landmark 2018 federal court decision that ruled social gaming can constitute gambling when an operator sells gameplay credits.

Judge Milan Smith of the Ninth Circuit US Court of Appeals said social games can be considered “something of value,” despite a lack of direct monetary worth, which means they can be classed as a gambling “stake” under state law.

Washington defines gambling as “risking something of value on the outcome of a contest of chance or a future contingent event not under the person’s control or influence to receive something of value in the event of a certain outcome.”

Similar cases are pending against Apple, Google and Meta, which have all denied any wrongdoing.