Amazon has consented to a proposed resolution regarding a class-action lawsuit alleging that the tech giant colluded with developers of social casino applications to facilitate unlawful online gambling activities.
Subject to approval by a federal judge, Amazon and the lead plaintiff, Steve Horn from Nevada, will resolve allegations that the company profited substantially by allowing illegal gambling applications to be accessible for download on its Appstore.
The proposed settlement includes a Covenant Judgment of $201,355,607.75 against Amazon, which is estimated to be around 30% of the total expenditure by class members on social gaming applications.
However, the Washington-based Amazon will not be disbursing the complete $201.3 million settlement amount. Instead, the company is enabling class counsel to seek refunds and reimbursements directly from the developers of the social casino applications.
“Put simply, under the terms of the proposed settlement, Class Counsel will act in place of Amazon to pursue financial recovery from the developers, enforcing their contractual obligation to indemnify Amazon for the portion of the Covenant Judgment attributed to the Class’s spending on their applications,” the settlement details.
The agreement encourages developers to “participate” and “cover their proportional share of the covenant judgment, including a prompt, voluntary settlement of the indemnification claims.”
No Admission of Fault
Attorneys representing Horn claimed that Amazon, by permitting its Appstore to feature social casino applications, violated Washington’s gambling and consumer protection regulations.
Although the subject applications do not support real money gambling, they offer users in-app purchases that allow them to continue playing once their initial credits are exhausted. The funds spent on these in-app purchases are non-refundable.
In the settlement agreement, Amazon does not accept any wrongdoing but does not interfere with the plaintiffs’ pursuit of financial relief.
This settlement enables us to maintain a diverse offering in our Appstore while requiring developers to implement changes that enhance customer experience.
Amazon, Inc.
“Applications in our Appstore are required to comply with relevant laws, and we retain the authority to remove any app at any time,” the announcement stated.
2018 Ruling on Social Gaming
The lawsuit against Amazon and its social gaming apps was initiated in Washington, where Amazon is headquartered, following a significant 2018 federal court ruling that stated social gaming may qualify as gambling if an operator sells gameplay credits.
Judge Milan Smith of the Ninth Circuit US Court of Appeals indicated that social games can be perceived as “something of value,” despite lacking direct monetary value, thereby classifying them as a gambling “stake” under state legislation.
Washington state law defines gambling as “risking something of value on the outcome of a chance contest or a future event not within the person’s control or influence, with the intention of receiving something of value should a certain outcome occur.”
Similar lawsuits are also pending against Apple, Google, and Meta, all of which have denied any misconduct.