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Aristocrat to Fork Out AU$47m in Mobile Gaming Lawsuits Settlement

  • US players of Aristocrat's mobile casino games are the beneficiaries of the settlement
  • Australian company had two class action lawsuits relating to its Big Fish digital gaming division
  • AU$189 (US$124m) will be paid by former Big Fish owner Churchill Downs Incorporated
  • US Federal District Court for the Western District of Washington first needs to approve the deal
  • Games were deemed to be illegal gambling as they offered?virtual chips in exchange for cash
Andrew O’Malley

Lawsuit document and pens on a desk
Aristocrat Leisure is paying AU$47m (US$31m) as part of a settlement deal for two lawsuits in the United States concerning its mobile casino games. [Image: Shutterstock.com]

A significant settlement

Australian poker machines manufacturer Aristocrat Leisure Ltd has agreed to a AU$47m (US$31m) settlement to customers in the United States who lost money using virtual chips to play its mobile casino games.?

two class action lawsuits relating to its Big Fish digital gaming division

The Australian Stock Exchange-listed company was facing two class action lawsuits relating to its Big Fish digital gaming division, which was acquired for AU$1.3bn (US$850m) in January 2018. This is the side of the company that creates digital slots games as well as poker and blackjack offerings.?

Aristocrat said on Monday that an in-principle agreement has been reached, with the total settlement amounting to AU$236m (US$155m). Aristocrat will be paying AU$47m (US$31m), with the remaining AU$189m (US$124m) to be incurred by the former owner of Big Fish, Churchill Downs Incorporated (CDI).?

The sum was agreed on following mediation between Big Fish, Aristocrat, CDI, and the respective plaintiffs. It now awaits approval from the United States Federal District Court for the Western District of Washington. 

The lawsuit allegations

While online gambling is not legal in many US states, consumers are able to download games from Aristocrat for free and purchase virtual chips to play them. 

Only five months after Aristocrat’s acquisition of Big Fish, the US Court of Appeals for the Ninth Circuit issued a ruling that the games from Big Fish constituted illegal gambling in Washington state. This led to the filing of the two class action lawsuits. 

Manasa Thimmegowda was the lead plaintiff in one of the lawsuits. She detailed in court documents how playing at Big Fish Casino on her iPhone in 2017 lost her over US$3,000 in a month after she bought virtual chips with real money. Another lead plaintiff, Cheryl Kater, also lost US$1,000 worth of chips. 

illegally profiting from tens of thousands of people

Court documents alleged that by offering online gambling games, Big Fish Casino was in violation of Washington state law and was illegally profiting from tens of thousands of people.

Plaintiffs seek compensation

The players of the games in question were looking to get back the money they lost playing at Big Fish Casino, Epic Diamond Slots, and Jackpot Magic Slots. Payment was also sought for lawyers’ fees, punitive damages for the three individual plaintiffs, and for the nationwide class action. 

The main question asked by the US Court of Appeals was whether or not the virtual chips carried any value. Chips could be bought for US$1.99 up to US$250 and were not exchangeable for cash. As online customers could not play the games without any chips, they were deemed to be a “thing of value”.

Aristocrat has seen its poker machine business hit hard in recent months due to the ongoing coronavirus lockdown. However, its digital division generated AU$1bn (US$650m) in revenue for the half-year up to March 31, making almost the same as its poker machine business. In 2019, the full-year profit for the overall company was AU$752.8m (US$492.4m).?

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