Jacob Bielanski Mar. 14, 2016, 12:16pm


CHICAGO (Legal Newsline) – A mobile app maker facing a class action lawsuit over allegations that its game was a form of “gambling” won a dismissal Jan. 26 in Chicago federal court.

Plaintiffs alleged that “Castle Clash,” made by Sky Union, was violating various consumer protection laws in California, Illinois and Michigan. They claimed that the in-game purchasing made the app a form of gambling.

Specifically, they targeted the ability to purchase “gems” that could be used to upgrade various aspects of a user’s world made that world more valuable for sale on an open market.

But in his ruling, Judge Matthew F. Kennelly pointed out that making money off of the increased in-game value required players to go outside of the game and sell their entire account. And the value of those accounts being sold cannot be quantified, he said.

“Ultimately, players who use their purchased gems to play... are not paying for the chance to win anything of measureable value,” Kennelly wrote.

The dismissal comes after a string of similar rulings across the country. In Maryland and Washington, cases were dismissed involving online games that used virtual currency to replicate a casino. Purchases within the game, the judges ruled, were only to extend playtime and not for an expected cash payout or other reward of value.

Attorney Jeff Ifrah, of Ifrah Law in Washington, D.C., has consulted for defendants on class action suits within the mobile gaming industry. He said the ruling will likely deter similar cases in the future.

“Class action firms are obviously in the business of making money,” Ifrah told Legal Newsline. “After this string of lawsuits, I assumed they’re going to abandon attempt at further refining or reinventing these arguments.”

Normally, similar cases against the defendant would be viewed as a “nuisance” to be settled out of court, Ifrah said. The problem with settlements in these cases, he said, is that a settlement typically requires the company to stop the alleged misconduct.

In the case of the app makers, that would result in a virtual shutdown of the game.

“How do you do that when the entire nature of your game depends on you doing that every day, every second,” Ifrah said. “It’s kind of a problem that precludes settlement.”

Ifrah said it was unlikely that the complaints would result in an increase in regulations. The mobile gaming industry lacks any clearly defined consumer protection standard, he said.

And because of that, he said, there hasn’t been any noticeable push for further regulation. He opined that potential legislation would likely focus on limiting access to in-game purchases.

“If there was some form of regulation, I expect it would take the form of age restriction... or there might be limitation on how many purchases can be made, for example, at one time,” Ifrah said. “Something to try and limit some sort of addiction or something like that.”

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