Amazon Faces Legal Action Over Social Casino Games

In an attempt to cash in on the rise of social casino gaming in countries like the USA, where real money gambling is strictly governed, Amazon has allegedly been allowing customers to download and install social casino-themed games from their online storefront.

The general consensus in the social gaming space is that since there are no real money prizes, it does not legally constitute 'gambling' and is, therefore, seen as a safe and legal hobby.

  Amazon Faces a Class Action Lawsuit

A self-proclaimed gambling addict, Steven Horn, is spearheading a suit against Amazon. The class action lawsuit claims that Amazon knowingly and wilfully profit from the revenue generated by "illegal casino games", which they market across the USA, including Washington, via their online store.

The issue of some members of the class action suit residents of Washington is a vital aspect of the suit, as the state does not allow for any gambling games, including social games.

The suit attempts to have the courts deem social games as illegal online slots to make the following proclamation applicable:

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“Violations of Revised Code of Washington § 4.24.070: All persons losing money or anything of value at or on any illegal gambling games shall have a cause of action to recover from the dealer or player winning, or from the proprietor for whose benefit such game was played or dealt, or such money or things of value won, the amount of the money or the value of the thing so lost.”

The documents filed with the courts explain the addictive nature of RNG casino games and address how corporations use them to generate enormous profits. Social gamblers spend large sums of money without hope of winning a jackpot prize as they would at a real money casino.

 Amazon Takes a Monster Commission

One might not realise that Amazon treats the promotion and distribution of social gaming apps the same way that Apple does. Apple and Epic were recently embroiled in a bitter court battle over the fact that the tech company charges game developers a whopping 30% commission from the sale of their game and any in-app transactions.

When it comes to social slot apps, Amazon will distribute them for free, allowing the customer to download and install them at no cost. Still, they take 30% of every purchase of XP booster, extra credits and any other microtransactions the social casino offers.

The court documents state:

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“In exchange for distributing the casino games, providing them valuable data and insight about their players, and collecting money from consumers, Amazon takes a 30% commission of every wager, earning billions in revenue. - As such, Amazon is liable as a co-conspirator to an illegal gambling enterprise and conspiracy.”

Using US industry data, the suit argues that with a proven track record of $6 billion in annual revenue and the fact that Amazon receives 30% of that figure commiserate with the income of their partners, the company should be considered an active participant in unregulated gambling and therefore held to account for its actions.

Is This a Financially Sound Nuisance Suit?

While social slots and other for-fun instant games are not accounted for in the US gambling laws, this suit may have merit. The two aspects of the suit that are in its favour are if the plaintiffs can prove the company contravened Washington law (knowingly or otherwise) and the fact that with billions of dollars on the line, paying a few hundred million in reparations is the easiest way to put this to bed.

In 2022, IGT and DoubleDown settled a similar case for the outrageous sum of $415 million. The clincher in their case was the same as we see here; they ran the risk of being found guilty of contravening Washington state law, which could have turned it into a massive case should the Federal government have decided to use it as a statement maker.

The best bet was not to gamble on the outcome in court but to settle with the plaintiffs and move on. Only time will tell whether that will be the same route Amazon takes, but for a company of its size, it would make sense to take the slap on the wrist and avoid the nuisance of a protracted court case.