Apple, Google and Meta are facing US-based legal challenges after a federal judge in California ruled that they must stand trial for allegedly promoting “illegal gambling” through casino-style apps that are addictive to users.

The lawsuits, which were filed from 2021 onwards by multiple plaintiffs, centres on the companies' “improper processing of payments” for simulated gambling apps, which they allege cause addiction and mental health issues such as depression and suicidal thoughts by promoting “an authentic Las Vegas-style slot machine gaming experience”.

The lawsuits say that Apple, Facebook, and Google conspired with social casino app developers to participate in racketeering activity in violation of the Racketeer Influenced and Corrupt Organisations Act (‘RICO’).

Social casinos are playable apps accessible via smartphones, tablets and internet browsers. These simulated casinos are designed to resemble traditional games, such as slot machines or bingo, to make them just as engaging as “live” gambling.

According to a document filed by the US District Court Northern District of California San Jose Division, every year consumers purchase billions of dollars worth of online casino chips from these platforms, which in turn help social casino app developers target consumers to maximise revenue. The platforms also operate as payment processors for all in-app purchases of virtual chips in illegal slots.

The document says that these platforms collect the money that players spend on virtual chips, retain a 30 per cent commission for themselves, and pay the rest to the illegal slots, with commissions resulting in an estimated $2 billion in revenues.

The plaintiffs argue that these platforms act very similarly to bookmakers with gambling jargon as they accept real money from players, provide casino chips to bet on “illegal” slot machine games, earn 30 per cent of gross sales for their contribution to the venture, and, sometime later, pay the purchase amount (net of their commission) to the gambling game developers.

Google, Meta and Apple had previously sought dismissal of the complaints filed against them by invoking the Section 230 of the Communications Decency Act of 1996 (“CDA”), which typically shields platforms from liability for third-party content.

On Thursday, district judge Edward Davila in San Jose, California, denied the companies motion to dismiss the lawsuit.

Judge Davila ruled that Section 230 does not apply because the companies were involved in processing payments and not just hosting content.

Although some claims under state laws were dismissed, most consumer protection claims will proceed, with the exception of those under California law, the judge ruled.

The companies are now allowed to immediately appeal the decision.

National Technology News has approached Apple, Google and Meta for comment.

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