Amazon Proposes $201 Million Settlement in Social Casino Lawsuit

Amazon is at the center of a legal dispute in the United States concerning in-app purchases within social casino apps. The tech giant has now proposed a settlement. This covers the period from November 10, 2019, to November 10, 2025.

Specifically, it relates to purchases made through the Amazon Appstore. This development could have far-reaching implications for platform operators and game developers.

Numbers and facts

At the heart of the agreement is a proposed judgment of $201.36 million. This amount would only become effective after final judicial approval. The sum corresponds to 30% of qualifying spending on virtual chips through the Amazon Appstore during the class period. Amazon would not pay this sum directly. Instead, class members would agree not to enforce the judgment against Amazon. Amazon would then transfer its contractual indemnification and contribution rights involving 32 social casino developers to a litigation trust.

The trust could hold these companies accountable. It could negotiate or take legal action to recover their allocated shares. All collected funds would go to eligible class members. Amazon would also provide an additional $2.5 million to cover notices and settlement administration. The lawsuit was filed by Steven Horn in November 2023.

Background

The class action covers individuals in the United States who made in-app purchases in over 200 social casino apps via the Amazon Appstore during the specified period. Purchases already covered by prior developer settlements are excluded to prevent double recovery. Plaintiff Steven Horn accused Amazon of facilitating transactions for casino-style applications, thereby violating gambling and consumer protection laws in the state of Washington. Players can purchase virtual chips in these apps and use them in slots or other games of chance. However, any won chips cannot be converted into real money.

The lawsuit focuses on Amazon's role in processing these transactions. Amazon allegedly handled the in-app purchases and retained a 30% platform fee. Amazon denied any wrongdoing. The company emphasized that Appstore developers must comply with applicable laws.

Developers have two options. They can sign a Participation Form and Release within 90 days of final approval. A participating developer would pay 80% of their own pro rata sub-judgment. In return, they would be released from the covered claims. Furthermore, they could offer alternative payment methods in their apps for three years. This bypasses Amazon's standard payment processing and the associated 30% fee. For non-participating developers, the trust would seek to enforce 100% of the pro rata sub-judgment against each company.

This proposed agreement still requires judicial approval. It does not prove that Amazon violated gambling laws. The amount ultimately paid to users might be less than $201.36 million. This depends on developer cooperation and the effectiveness of enforcing the assigned claims. Similar lawsuits are still pending against companies like Apple, Google, and Meta.

“Liability in the case of app stores is now very closely linked to the payment control system. A platform may avoid funding the main award itself, yet its transaction records, fees, and developer contracts can still become the route through which users seek recovery.” - Unknown, iGaming Industry Observer

Why it matters for German players

For German players operating in the regulated online gambling market, this development has only indirect significance. Social casinos in Germany do not fall under the strict regulation of the Interstate Treaty on Gambling 2021 (GlüStV 2021) as long as no real money can be won. However, the situation in the USA shows how quickly the gray areas of online gambling can lead to legal problems. The GlüStV 2021 protects players with clear rules. These include a stake limit of 1 Euro per spin and a deposit limit of 1,000 Euros per month. These measures, along with the central blocking system LUGAS, are designed to prevent gambling addiction and combat fraud.

Players in Germany should always make sure to play exclusively at online casinos that are on the whitelist of the Joint Gambling Authority of the Federal States (GGL). This is the only way to ensure that strict German laws are adhered to and a high level of player protection is guaranteed. Offers outside the GGL whitelist are illegal and pose significant risks to players. The current jurisprudence in the USA underscores the need for clear regulation in online gambling.

What it means for GGL-licensed casinos

The situation with Amazon has hardly any direct impact on GGL-licensed casinos in Germany. These providers operate under a strict legal framework supervised by the Joint Gambling Authority of the Federal States (GGL). Key aspects of youth and player protection are at the forefront here. These include the deposit limit of a maximum of 1,000 Euros per month and the stake limit of 1 Euro per game round for slot machines. The nationwide self-exclusion system LUGAS is also an important component of the regulation.

GGL casinos must be transparent and must not make misleading offers, as was partly the case with the social casinos in the Amazon Appstore. The strict rules in Germany prevent similar claims, as the difference between virtual and real money is clearly defined. This ensures a safe and transparent gaming environment. It underscores the importance of German licensing for consumers and operators alike.