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Facebook Faces Lawsuit over Alleged Participation in Illegal Online Gambling Services Called “Social Casinos”

After several lawsuits have been faced by some of the largest international technology companies, now Facebook is facing a class-action complaint filed in the Northern District of California at the end of the previous week. The three consumers who started the legal action claim that the social network has allegedly taken part in an illegal gambling enterprise on the Internet.

The plaintiffs claim that, over the past ten years, some US technology companies have joined forces with slot machine makers to create a new product line called social casinos. The legal complaint, filed in court on April 16th, 2021, describes social casinos as applications that can be accessed on Internet browsers, tablets and smartphones and offer a true Las Vegas-style experience of slot machine gambling to customers.

The three plaintiffs claim that social casino companies that have their apps available on Google, Facebook and Apple’s platforms have found a way to bring slot machine games into consumers’ lives, with a 24/7 availability. Furthermore, the legal action explains that social casinos provide customers with the chance to purchase virtual chips with real money, and then spend those chips at the virtual slot machines in return for the chance to win more chips that would allow them to keep gambling.

The problem with so-called social casinos, however, is the fact that, unlike original Las Vegas slots, this gambling service does not allow consumers to cash out their chips. Instead, players are only able to use them for more spins on the virtual slot machines.

Social Casinos Use Social Media Platforms to Target and Exploit Vulnerable Players, Plaintiffs Claim

The legal action that Facebook is facing claims that social casinos actually combine the power of social media platforms associated with identifying, targeting and exploiting their customers, especially the ones who are more vulnerable and susceptible to addictive behaviors, with the addictiveness of regular slot machines.

Furthermore, according to the three plaintiffs, social casinos could not operate and generate profit at such a higher level if they do not get help from the abovementioned platforms. They also claim that targeting, retaining and collecting losses from problem gamblers is closely associated with social media, which are actually the ones keeping full control over the permission of social casinos into their mobile app stores or platforms. Apart from that, social media platforms are also closely connected to the distribution and promotion of such gambling services and receive a portion of the losses generated by the customers.

The lawsuit that is currently being faced by Facebook claims that 9 out of the 12 most affluent apps available on the platform are social casinos. In their legal action, the three plaintiffs say that the social casinos use Facebook as a distribution and payment processing channel, while providing the social network with personal data and insight about their consumers. Allegedly, a 30% commission from every bet in the social casinos is received by Facebook.

According to the lawsuit, social casinos are illegal under the existing gambling legislation in many US states, including California and Washington.

Now, the three plaintiffs, who are represented by Edelson PC, seek class action against the company, with the proposed certification including all individuals in the US who have lost money to any illegal slot games offered on the Facebook platform.

 Author: Hannah Wallace

Hannah Wallace has been part of our team since the website was launched. She has a master’s degree in IT.