Aristocrat Sued for Alleged Illegal Gambling Through Social Casino

Aristocrat Faces Legal Battle Over Allegations of Illegal Gambling in Social Casino Products

Aristocrat Leisure, one of the world’s leading gaming suppliers, is under legal fire as a Kentucky man sues the company, alleging that its social casino products constitute illegal gambling. The lawsuit, filed under Kentucky’s Loss Recovery Statute, could have wide-reaching implications for the gaming industry, particularly for companies that offer social casino games with virtual currency. Explore the details of the lawsuit, the legal precedents involved, and the potential impact on the industry.

The Lawsuit: Allegations of Illegal Gambling

The lawsuit against Aristocrat was filed by James Scott Tipmore, a Kentucky resident, who claims that Aristocrat’s social casinos are illegal under state law. The lawsuit leverages Kentucky’s Loss Recovery Statute, which allows the loser of gambling games to sue the winner to recover losses. Notably, this law also permits any third party to sue the gambling business if the original loser or their creditor fails to take legal action within six months.

This statute has been used in high-profile cases before, including a landmark 2021 lawsuit against Flutter Entertainment-owned Stars Interactive, which led to a massive $300 million settlement with the state of Kentucky. The precedent set by such cases has emboldened other litigants to challenge social casino products, which have long been a grey area in gambling regulation.

What Makes Aristocrat’s Social Casinos Controversial?

Aristocrat’s social casinos use virtual currency that players can purchase with real money but cannot convert back into cash. Wins in these games merely allow players to continue playing by gaining additional spins rather than providing a cash prize. Despite this structure, Tipmore’s legal team argues that the virtual rewards still represent “something of value,” making the games illegal under Kentucky’s gambling laws.

The complaint further states: “Companies such as Aristocrat Leisure have leveraged the power of modern smartphones, tablets, and computers to smuggle illegal slot machines into the homes and workplaces of Americans, where gamblers can satisfy their gambling addiction 24 hours a day, 365 days a year, without having to leave their homes or places of work.”

Tipmore’s attorneys contend that social casino games are essentially mobile slot machines, cleverly disguised as entertainment apps. The lawsuit also references instances where players have developed gambling-like addictions to similar products, challenging the notion that these games are purely for fun.

Geo-Fencing and Responsible Gaming Concerns

Tipmore’s legal team highlights that Aristocrat has the technological ability to geo-fence its games—restricting access to players in jurisdictions where gambling is illegal. This argument suggests that Aristocrat could have chosen to prevent its games from being accessible in Kentucky but opted not to. By ignoring these measures, the lawsuit argues, Aristocrat is knowingly facilitating illegal gambling within the state.

The plaintiff seeks to recover triple the total losses of all Kentucky citizens who have engaged with Aristocrat’s social casino products during the statute of limitations period. Although the lawsuit has not been filed as a class action, the legal firm David Norris LLP is encouraging individuals nationwide who have played slot apps to come forward, potentially paving the way for further claims against Aristocrat.

Aristocrat’s Defense: Social Casinos Are Not Gambling

In response to the allegations, an Aristocrat spokesperson firmly rejected the claims, emphasizing that their social casino games do not constitute gambling. The company argues that its games do not offer any cash-out options or opportunities to win tangible rewards, classifying them purely as entertainment.

“We firmly reject any contention that social-casino-themed mobile games are gambling and will vigorously defend our position,” the spokesperson told NEXT.io. “These games very clearly offer no opportunity to ‘cash out’ or win anything of value. Such games are offered purely for entertainment.”

Industry Implications: A Legal Precedent in the Making?

This lawsuit against Aristocrat could set a significant legal precedent, potentially affecting the entire social casino sector. As regulators and courts scrutinize the fine line between social gaming and gambling, the outcome of this case could reshape the business models of companies offering similar products. A ruling against Aristocrat might open the floodgates for further litigation and stricter regulations, impacting how these games are marketed, distributed, and monetized.

The lawsuit against Aristocrat Leisure highlights a growing legal and regulatory challenge for the social casino industry, as states like Kentucky scrutinize the nature of these games under existing gambling laws. With past cases resulting in substantial settlements, Aristocrat’s defense strategy will be crucial in navigating these complex legal waters. As the industry awaits the outcome, the case serves as a stark reminder of the evolving landscape of gambling regulation and the potential risks companies face when operating in legal grey areas. For now, the battle lines are drawn, and the stakes could not be higher for Aristocrat and the broader social gaming market.