Section 230 and Online Casino Apps: Legal Ramifications and Misapplications

The cases are In re: Apple Inc. App Store Simulated Casino-Style Games Litigation, No. 22-16914 (9th Cir.); In re: Google Play Store Simulated Casino-Style Games Litigation, No. 22-16921 (9th Cir.); and In re: Facebook Simulated Casino-Style Games Litigation, No. 22-16888 (9th Cir.). At issue are various simulated casino apps available in the Apple App Store, Google Play Store, and Facebook App Center. These so-called “social casino apps” simulate a “Vegas-style” gambling experience but differ from traditional casinos in a fundamental way: players cannot win any money.  The only thing they can win is the ability to continue playing. Any chips a player wins, purchases, or otherwise obtains can only be used within the apps. Players cannot cash out. Plaintiffs were allegedly harmed by spending money on these social casino apps. Rather than suing the developers, Plaintiffs have sued Apple, Google, and Meta in separate but parallel putative class action lawsuits. Plaintiffs allege that playing these apps constitutes illegal gambling under the laws of 16 states, and that the Platforms are liable for (1) “offering, categorizing, and promoting” these apps; (2) sharing data with the developers, which the developers use to encourage more allegedly illegal gambling; and (3) facilitating the gambling by processing the payments for virtual chips. The cases present key arguments concerning Section 230 in relation to casino apps. The district court was deemed to have erred in failing to recognize that Section 230 prevents the plaintiffs’ theory of liability concerning payment processing. However, the court correctly rejected the other two theories of liability related to promoting social casino apps and aiding app makers in user engagement and revenue. The court found that the platforms’ promotion of social casino apps was similar to other recommendation functions protected by Section 230. Additionally, the court ruled that the platforms’ assistance to app makers did not make them content providers, as they only provided suggestions, not actual content. Nonetheless, the court allowed the second theory of liability, which concerned the platforms’ payment processing for virtual chips in social casino apps. The platforms argue this ruling is flawed, as the legality of the virtual chips is tied to third-party content (the social casino apps), making them eligible for immunity under Section 230. If the plaintiffs’ argument is valid, the app makers, not the intermediaries providing tools to various app makers, should be the proper defendants. The legality of the virtual chips is intertwined with third-party information and should not render the platforms as publishers. HomeAway’s decision establishes that platforms are not publishers when their conduct’s legality is independent of third-party information. However, the district court misapplied this ruling since the plaintiffs did not claim that payment processing for virtual chips is unlawful apart from the social casino apps. The court’s payment processing ruling contradicts Congress’s Section 230 policy decisions and should be overturned. Ultimately, Section 230 should fully protect the platforms from the plaintiffs’ claims. The amici strongly urge the Court to act on the district court’s decision regarding Plaintiffs’ claims. Specifically, they seek the reversal of the court’s denial of dismissal for certain claims, affirmation of the dismissal for other claims, and the instruction to dismiss Plaintiffs’ complaints altogether.

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