The Day That Social Casinos Finally Lost

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Social casinos have been available for well over a decade. These gaming sites don’t technically offer real-money gaming.

Therefore, they’ve largely avoided the distinction of being labeled “gambling.” Social casinos have been able to operate in many jurisdictions without question as a result.

This aspect gives social gaming sites a huge advantage over traditional online casinos. The latter must typically obtain licensing in any market where they want to operate.

However, social gaming doesn’t always skate by without consequences. In fact, one of the biggest social casinos recently got hit with a massive lawsuit.

Below, I’ll cover more on social gaming in general along with how it finally lost big in one state.

Social Casinos Previously Weren’t Viewed as Gambling

You don’t have to pay money to enjoy social gaming. Instead, these sites start you off with a bundle of free coins/chips.

You can continue playing free casino games at a social casino so long as you have these chips. Once you run out, though, you must purchase more coins to keep playing.

Luckily, the cost to buy these chips isn’t usually too much. For example, you might pay $20 for 100,000 coins.

Nevertheless, you are paying money for virtual tokens that have no monetary value. The house edge is also against you, meaning you’re more likely to run out of these chips than keep gaining them.

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Of course, governments typically only view gambling as something that requires risking money to win money. Many regulators turn a blind eye towards social gaming, given that money isn’t technically being bet.

Instead, you’re paying for tokens that can be used to entertain you. This model is similar to what Dave & Buster’s and Chuck E. Cheese uses.

Social gaming is more about playing fun games and sharing achievements with your friends. For example, you can share your latest level-up with Facebook buddies.

Lawsuit Against Big Fish Games Reveals the Truth

Launched in 2002, Big Fish Games (BFG) has become one of the main names in social gaming. It started out producing computer games, such as solitaire and hidden-object games.

BFG has since expanded their operation to serve social casinos. They routinely draw countless gamers who join their friends in the social gaming world.

So far, BFG has built a pretty good business for themselves. The company generates approximately $500 million in annual revenue.

Big Fish Gaming ran into serious trouble when Washington state residents Manasa Thimmegowda and Cheryl Kater sued them. Each of the plaintiffs spent thousands of dollars buying chips at BFG.

The latter advertises their services as “free to play.”

In reality, though, BFG is willing to take as much money as their customers will spend. Kater and Thimmegowda ultimately felt that they were duped into overspending. They claim that BFG is actually an illegal gambling site under Washington law.

Big Fish Games Settles for $155m

The original founders of BFG sold the company to Churchill Downs for $855 million in 2014. The latter sold the social gaming giant to Aristocrat Leisure for $990 million in 2018.

Both Churchill Downs and Aristocrat Leisure were named in the lawsuit. Therefore, both are on the hook in this case.

Big Fish Games Logo

A Seattle-based judge originally threw out the case against the two parties. However, a federal appeals court overruled the Seattle judge and stated that BFG was offering illegal gambling according to WA laws.

In July 2020, Aristocrat and Churchill Downs settled the lawsuit for $155 million. The settlement includes the following stipulations:

  • Churchill Downs will cover $124 million of the amount.
  • Aristocrat Leisure will cover the remaining $31 million.
  • The settlement includes BFG players nationwide who step forward to claim their money.

Kater’s court documents offer a snippet that explains more on why BGF lost this case:

All online or virtual gambling is illegal in Washington. Big Fish Casino’s virtual chips have no monetary value and could not be exchanged for cash, but Big Fish Casino did contain a mechanism for transferring chips between users, which could be used to ‘cash out’ winnings.

Will Social Gaming Ever Be the Same Again?

The Big Fish lawsuit and settlement are black marks on social gaming. They pinpoint the first time that a party has successfully taken action against this industry.

As mentioned before, social casinos have always evaded the real money gambling category. They’ve maneuvered themselves into the entertainment category instead.

That said, you might wonder if social gaming is in trouble. For now, the industry seems to be alright everywhere outside of Washington.

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The Evergreen State is one of the toughest on internet gaming. It considers playing online casino games, poker, and sports betting to be a felony.

If social gaming was going to take a loss, it’s little surprise that it happened in Washington. Judges in many other jurisdictions will probably be more lenient on the industry if additional court cases arise.

Of course, each judge is entitled to their individual opinion. But largely speaking, social online casinos probably aren’t in complete trouble yet.

Social Casinos vs. Online Casinos

I’ve made some distinctions between social and internet casinos throughout this post. Now, I’d like to sum up the differences between the two.

Social Gaming Doesn’t Offer Real Money Prizes

Social casinos allow you to win coin/chips through games. They might also award you status points for playing.

The points help you level up and earn cool badges. You can also share your achievements with social media friends.

The coins serve as your bankroll. As long as you have chips, then you can keep playing games and working your way up the ladder. Of course, none of this has any financial bearing. You can’t trade the coins in for real money at any point.

But you can at least earn bragging rights among your friends for a high level.

Online Casinos Feature Big Jackpots

Online casinos are where big wins happen. They give you an opportunity to go on a hot streak in blackjack, use skillful play in video poker, and chase huge slots jackpots.

The latter are especially appealing to many people. Numerous gamblers like playing slots for real money and going after big progressive prizes.

Of course, the odds of winning a big jackpot are slim. However, you at least have an opportunity to win serious money through regular gaming sites.

Social Casinos Are Usually Cheaper to Play

The big downside to social casinos is that they don’t provide any chance to win money. Even if you hit a jackpot, you’re only earning tokens that are meant for pure entertainment.

The upside is that you won’t typically spend as much money at a social casino. As covered before, these sites hand you a certain amount of free chips upfront.

You’ll usually last quite a while on the starting chip stack alone. Even when you do pay money to reload, you won’t have to spend much.

$20 often gets you a sizable amount of chips. You can even pay more to get a better deal that includes additional coins.

Online Casinos Offer Big Bonuses

Internet casinos require a larger investment than social gaming sites. Therefore, they offer lots of online casino bonuses to provide incentive for depositing.

You’ll be privy to a large welcome bonus upon first depositing at a new casino. For example, you might get a 100% match bonus worth up to $500 on your initial deposit.

Gambling sites give you more opportunities to earn bonuses. They offer cashback, free slots spins, more deposit bonuses, and/or VIP rewards.

Of course, such deals come with strings attached. You must satisfy terms and conditions before withdrawing money from rewards. But you’ll at least enjoy lots of opportunities to earn extra money at internet casinos.

Social Gaming Combines Entertainment and Social Media Aspects

Social casinos don’t attract gamers through tokens and accolades alone. They encourage people to join their sites and spend money by also including social media elements.

These sites encourage you to share big wins with friends on Facebook, Instagram, and Twitter. They may even give you free chips for referring buddies.

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You can also brag to your friends when achieving higher levels at a social casino. This element creates a friendly competition between you and buddies.

Internet Casinos Feature More Games

While social gaming sites can be fun, they don’t typically offer a large game selection. They mostly concentrate on providing a small collection of quality games with unique graphics.

Online casinos, meanwhile, feature countless games. The average internet gambling site provides 300 to 500 games that cover everything from slots to blackjack.

Of course, you may not have a use for playing hundreds of slots. But it’s always nice to have the variety when you’re in the mood.

Conclusion

Social gaming certain differs from traditional online gaming. It doesn’t require you to bet money to win money. Instead, you only buy chips when your free stack runs out.

Many lawmakers have long considered this entertainment and nothing else. However, the tide may be turning after the BFG ruling.

Big Fish’s past and current parent companies are now on the hook for a combined $155 million. If BFG suffered this fate, then other social casinos could soon face lawsuits.

For the time being now, though, no additional lawsuits have been leveled. Other social gaming sites appear safe in the immediate future. But what happens in the distant future remains to be seen.