Master Complaint Filed Against Facebook Over Role in ‘Social Casino Enterprise’

More than two dozen consumer plaintiffs have filed an amended complaint against Facebook Inc. for its participation in an alleged illegal gambling conspiracy. The consolidated lawsuit concerns social casinos, an app or website where a user can play casino games online using fiat currency for more chances to play, but without the chance to win real money or tangible prizes.

The case against Facebook was initially filed in April. Monday’s revised filing comes after the court issued an order creating a leadership hierarchy for the case and setting three separate tracks against defendants Google, Apple, and Facebook. As previously reported, game creators and the platforms that host or distribute the games have recently been under fire for the proliferation of social casinos.

This week’s complaint claims that social casinos are highly addictive, manipulative games that can wreak financial havoc on players. The lawsuit also claims that social casinos are illegal under some states’ gambling laws. In support of this proposition, the complaint points to a Ninth Circuit case finding that virtual gambling chips are a “thing of value,” noting that they earned the game’s creator millions, and thus concluding that the online game constituted illegal gambling under Washington law.

The complaint links Facebook to the alleged conspiracy by claiming that it “holds a major (30%) financial interest by hosting the game, driving customers to it, and acting as the bank.” The pleading also illustrates how Facebook allegedly facilitates, promotes, and controls illegal slot machine games. 

For example, the plaintiffs contend that Facebook enables targeted marketing through its collection of user data. “Illegal Slot companies and [Facebook] work together to target and exploit high-spending users, or ‘whales,’ as Illegal Slot companies like DoubleDown refer to their top-spenders,” the complaint says.

The plaintiffs ask for an order halting Facebook’s participation in the so-called “Social Casino Enterprise” and requiring it to return all ill-gotten profits. On behalf of 15 putative state classes and a nationwide class, the plaintiffs state claims for relief under the Racketeer Influenced and Corrupt Organizations Act, California’s Unfair Competition Law, and various state gambling and consumer protection statutes.

An attorney with Edelson PC is interim Lead Counsel, and the Executive Committee consists of lawyers with Davis & Norris LLP, Pearson, Simon & Warshaw LLP, Bursor & Fisher P.A., Edelson PC, Steyer Lowenthal Boodrookas Alvarez & Smith LLP, Tousley Brain and Stephens PLLC, Tycko & Zavareei LLP, Kopelowitz Ostrow Ferguson Weiselberg Gilbert, and Dovel & Luner LLP.