Illegal gambling at Aristocrat Australia’s social casinos

Slots giant Aristocrat Leisure has taken on a class action lawsuit accusing its digital division Pixel United of illegal gambling. 

Pixel is breaking the law by promoting its social casino apps, the Federal Court of Australia said.

Pixel’s social casinos on Facebook, Apple and Android are offered through subsidiaries Big Fish, Product Madness and Plarium. All three companies were acquired by Aristocrat in the 2010s, with aspirations of the growing social gaming market.

Social casinos allow players to play casino games with virtual chips. Typically, players are given a free stack of virtual chips when they sign up, but after the first stack is used up, they must pay real money to continue playing.

Dopamine Strike

The lawsuit says that a social casino should operate under the same rules as a regular casino in Australia.

It says that “the combination of audio-visual stimuli and the experience of winning virtual currency” causes users to be “psychologically attuned to the perception of a successful outcome and results in the release of dopamine” – as in gambling, the lawsuit says.

“Pokies”(land-based slots) and Aristocrat’s social slots differ in that the latter do not disclose the odds of winning and have no financial time limits for players, the lawsuit says.

Aristocrat’s lawyers deny that social casinos constitute “illegal interactive gambling services”,as users can close or suspend their accounts at will,

“These games do not meet the definition of a gambling service under the law. Aristocrat is taking steps to provide more information, choice and support to social casino players, over and above any legal requirements,” a spokesperson told The Australian Financial Review.

Frying the Big Fish

Aristocrat in 2021, along with Big Fish’s former owner Churchill Downs, settled a class action lawsuit by former Big Fish players in Washington state for $155 million.

This comes after a court in Seattle issued a shocking ruling in 2018 that virtual gaming chips used in social games constituted “something of value.”

This meant that Big Fish games could be classified as “gambling,” which Washington State defines as “risking something of value as a result of a game of chance or future contingent event not under the control or influence of a person for the purpose of obtaining something of value in the event of a particular outcome.” 

Only the State of Washington has determined that virtual chips constitute “something of value.” The plaintiffs in Austria will have to prove that social casinos can amount to a definition of gambling.

The fact is that Australia does not have a clear, comprehensive definition of gambling at the federal level. The closest thing to a definition is contained in a section in the Interactive Gambling Act 2001, which was enacted because of the growing popularity of Internet gambling.

That law defines “gambling service” as including, among other things, “a game of chance for money or anything else of value.”

Aristocrat told AFR that it intends to defend itself “vigorously”, assuring that social casinos with virtual chips are for entertainment purposes only.