Apple Facing Lawsuit Over Allegedly Profiting from Illegal Gambling in Apps

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Apple Facing Lawsuit Over Allegedly Profiting from Illegal Gambling in Apps
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Apple is facing another lawsuit regarding App Store rules and finances, this time over allegations that their distribution of and profiting from Zynga casino-style games constitutes illegal gambling in many states. These allegations primarily arise from the fact that Apple collects up to 30% of the revenue made from in-app purchases for apps listed in their database, including the money customers spend on virtual gambling tokens.

The lawsuit claims that Apple knowingly facilitates illegal gambling by hosting and facilitating payments on gambling apps.

The official class action complaint alleges that “Apple permits and facilitates illegal gambling by operating as an unlicensed casino.” The apps in question include casino-style slot machines and table games, and while it does not offer the players the opportunity to win real cash, they can win more tokens to purchase more play time, or choose to purchase more tokens to keep playing. The lawsuit further alleges that requiring players to purchase the chance for more playing time violates gambling laws in the 25 states included in the complaint.

According to the lawsuit, in 2019 players lost $3.5 billion to free-to-play games like the Zynga Casino Apps.

The complaint further references a student performed on free-to-play casino-style games, observing that the sociodemographic status of those who engage in real online gambling matches those of the people who play casino-style games in-app. Another study referenced in the complaint points out the ease of which making microtransactions in free-to-play gambling games can transition to making larger transactions within real online gambling schemes. Additionally, with the lack of oversight in casino-style apps that would be present in a real casino (i.e. a player without sufficient funds would not be allowed to continue playing), players are encouraged to continue spending money and making purchases that they may not have in order to continue playing.

Zynga Casino Games could not reach Apple customers nor process payments without the tech giant’s facilitation.

Before an app can be downloaded by Apple customers, it must first be approved by Apple. In fact, Apple also encourages app developers to incorporate their own technology to make things easier for customers, including in-game purchases which must always be processed via Apple to take out their 30% revenue; 30% is no small part of any company’s revenue, and inspired a previous lawsuit over allegations that Apple is using its supposed monopoly to overcharge app designers. Regardless of the legality of the gambling occurring in Zynga’s casino-style games, it is obvious that Apple benefits significantly from customers’ in-app purchases.

The complaint is seeking injunctive relief to prevent Apple from continuing to offer allegedly illegal gambling opportunities, such as those presented by Zynga Casino Games, as well as punitive and other damages to discourage it from behaving similarly in the future with respect to multi-state gambling laws.

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