Aristocrat Faces Lawsuit in Australia Over ‘Illegal’ Social Casino Games

Posted on: July 16, 2024, 06:29h. 

Last updated on: July 16, 2024, 06:29h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

Australian slots giant Aristocrat Leisure is facing a class-action lawsuit in its home country that accuses its digital arm, Pixel United, of offering illegal gambling.

Aristocrat, social casino, lawsuit, Big Fish, Product Madness, Plarium, Australian Federal Court
: Aristocrat, social casino, lawsuit, Big Fish, Product Madness, Plarium, Australian Federal Court

The suit, filed in the Federal Court of Australia, claims Pixel is breaking the law by promoting its social casino apps.

Pixel offers social casinos on platforms such as Facebook, Apple, and Android via its subsidiaries Big Fish, Product Madness, and Plarium. All three of these companies were acquired by Aristocrat in the 2010s as the company strategically sought to cash in on the exploding social games market.

Social casinos allow users to play simulations of casino games with virtual play-money chips. Typically, players are given a free stack of virtual chips when they sign up but must pay real money for more once the first stack is expended if they want to continue to play.

Dopamine Hit

The lawsuit claims that Aristocrat’s social casinos should be subject to the same regulatory standards as land-based, real-money slots in Australia.

That’s because “the pairing of audiovisual stimuli with the experience of winning virtual currency” has the effect of rendering users “psychologically conditioned to perceive a successful outcome … [and] … has the result of releasing dopamine” — just like gambling, according to the complaint.

Unlike land-based slots, or “pokies” as they are known colloquially, Aristocrat’s social slots do not disclose the odds of winning, nor do they have financial time limits for players, the lawsuit complains.

Aristocrat’s lawyers have denied its social casino apps constitute “illegal interactive gambling services,” adding that users can close or suspend their accounts whenever they want. There is also an option to disable in-app purchases.

“These games do not meet the definition of gambling service under the [law]. Aristocrat companies take proactive steps to provide more information, choice, and support to players of their social casino apps, over and above any legal requirements,” a spokesperson told The Australian Financial Review.

Big Fish Fried

In March 2021, Aristocrat, along with Big Fish’s former owner, Churchill Downs, settled a class-action lawsuit brought by former Big Fish players in Washington State for US$155 million. That followed the 2018 shock ruling by a federal court in Seattle that the virtual play chips used in the games constituted “something of value,” despite their lack of direct monetary worth.

This meant Big Fish games could be classed as “gambling,” which Washington state defines 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.”   

Washington state is the only state in the US to have determined that virtual chips constitute “something of value.” The plaintiffs in the Australian case will need to demonstrate that social casinos can be similarly classified under the country’s own legal definition of gambling.

The problem is, Australia does not have a clear, all-encompassing definition of gambling on a federal level. The closest occurs in Section 4 of its Interactive Gambling Act (2001), which was enacted in response to the rise of online gambling.

In the act, a “gambling service” is defined as including, among other things, “a game played for money or anything else of value.”

Aristocrat told the AFR that it intended to “vigorously defend” itself, emphasizing that its social casino games are played solely for entertainment.