$12M Settlement Reached with Zynga in Social Casino Illegal Gambling Litigation

On Monday, the plaintiffs litigating against Zynga Inc. moved their illegal gambling dispute closer to resolution with a proposed $12 million settlement. The unopposed motion recalled that Washington state gamers alleged that several Zynga-made social casino games, which drive players to pay real money for virtual casino chips, are unlawful as “online gambling games of chance.”

The filing explained that the suit was one of five filed between April and October 2015 alleging violations of state gambling laws. In the case of defendant Zynga, the complaint pointed to five games that purportedly constituted illegal gambling products and sought to recoup users’ losses. The motion also points to a win at the Ninth Circuit in another case, where the appellate court agreed that virtual chips are “things of value” under Washington law, making social casino games regulatable.

Substantively, this week’s motion argues that the $12 million non-reversionary settlement is fair and beneficial to class members. It says that they should receive between 20 and 60% of their alleged damages which given “the current economic climate … will be life-changing for many Class Members.”

The complaint says that although the parties were able to reach the settlement without engaging in dispositive motion practice, it is the result of seven years of litigation in parallel suits and years of litigation with Zynga. “Moreover, the excellent results delivered here equal those of the settlements reached in aggressively litigated cases,” the filing says, noting that the other settlements were for $155 million, $37 million, $24.5 million, and $6.5 million.

The motion asks the court to approve the settlement and approve a corresponding class of Washington residents who played Zynga’s games prior to preliminary approval of the settlement. In addition, it seeks appointment of Edelson PC and Tousley Brain Stephens PLLC as lead counsel. Zynga is represented by Calfo Eakes LLP and Paul Hastings LLP.

A parallel California case against Zynga was voluntarily dismissed earlier this month after Zynga moved to compel arbitration.