Apple Sued as Co-Conspirator to Illegal Online Gambling Enterprise

Two plaintiffs and a proposed class of “social casino” users have filed a lawsuit against Apple Inc. accusing the company of illegally profiting from its role as slot machine games’ distributor and payment processor. The two-count complaint charges Apple with violations of California’s Unfair Competition Law (UCL) and the federal Racketeering Activities and Collection of Unlawful Debts (RICO) statute.

Last week’s filing explains that traditional casinos have expanded operations into the online gambling realm in the last decade in the form of social casinos. Allegedly, social casino games, which can be played on mobile devices through applications and web browsers, are intended to replicate the “Vegas-style experience” of slot machine gambling.

In contrast, however, social casinos allow users to purchase gambling chips with real money, but permit them only to obtain more “spins” with purchased or won chips, not cash them out. In turn, the filing contends, some users, a subset of which may have gambling addictions, lose thousands of dollars to the online slot machine companies and the platforms that host them: Apple, Facebook, and Google.

According to the complaint, these platforms “leverage big data and social network pressures to identify, target, and exploit consumers prone to addictive behavior.” The complaint further explains that the platforms “retain full control over allowing social casinos into their stores, and their distribution and promotion therein, but they also share directly in a substantial portion of the gamblers’ losses, which are collected and controlled by the Platforms themselves.”

The filing contends that by using Apple for distribution and payment processing, social casinos enter into a mutually beneficial agreement. Allegedly, in exchange for distributing the casino games, providing the platform with valuable data about online players, and collecting money from consumers, Apple receives a 30% commission on every wager, earning it massive revenues at the expense of consumers.

The complaint argues that social casino slot machine games are illegal under the California Penal Code. In turn, the plaintiffs assert that the court has authority under the UCL to enjoin Apple, an alleged co-conspirator, from further participation in the unlawful business.

The plaintiffs’ RICO claim is similarly premised on the illegality of social casino slot machines. That claim contends that because California law prohibits such gambling activities, user fees and wagers constitute unlawful debts. A portion of the count states that Apple violated the RICO statute by “participating in, facilitating, or conducting the affairs of the Social Casino Enterprise through a pattern of racketeering activity composed of indictable offenses under California Penal Code § 330b and § 330.1.”

The plaintiffs are seeking to certify a class consisting of “[a]ll persons in the United States who have lost money to any Illegal Slots through the Apple platform.” They request restitution, damages, an injunction, and other relief the court deems appropriate from Apple’s “ongoing participation in an illegal internet gambling enterprise.”

The plaintiffs are represented by Edelson PC.