In the absence of law enforcement taking action to screen illegal and legal gambling apps and websites, it is primarily up to consumers in the United States to try to determine whether the gaming platform they are accessing is actually legal. This could change somewhat if a court case against some of biggest tech companies in the United States has the expected impact on the American online gambling industry.
A federal judge recently gave the plaintiffs in the lawsuit a small victory, though the main issues in the litigation remain largely undecided. If the momentum continues, companies like Alphabet, Appleand Meta may find themselves somewhat responsible for the availability of illegal gambling channels in their products.
Lawsuit that could affect the progress of the American online gambling industry
September 2nd, U.S. District Judge Edward Davila on the part of the plaintiffs on one of three allegations against Alphabet (parent company of Google), Apple and Meta (parent company of Facebook). The case is actually a consolidation of three formerly separate class action lawsuits against the companies.
While Davila denied two charges, the claim that Davila allowed to survive, at least for now, revolves around the interpretation of Section 230 of Title 47 of the United States Code. The defendants argued that the language protects them from liability for potentially illegal activity taking place on their platforms. Davila is not buying it yet.
It’s a small victory for the plaintiffs, however, as Davila did not categorically reject the defendants’ argument. Rather, he petitioned the United States Court of Appeals for the 9th Circuit for advice on Section 230. That would be the destination of an appeal of this case, so Davila is basically trying to buy time by seeking more clarity.
So the fate of this trial now actually rests on the 9th, with a full appeal to the same court possible later. If the 9 disagrees with Davila on this point and determines that Section 230 grants immunity to the defendants, the case is over at the district level.
What could a victory mean for the plaintiffs?
The plaintiffs in this lawsuit originally filed their suit in October 2020, with the next two and now consolidated cases being filed since then. The consolidated case argues that because Alphabet, Apple and Meta take a share of the purchases of digital currency used to play potentially illegal games, they are profit from illegal activity.
It should be noted that Alphabet has successfully dismissed similar challenges at the state level before using Section 230 immunity. If this litigation plays out differently, however, the final decision will determine what actions the companies will have to take to avoid similar lawsuits in the future.
At its most basic level, a victory for plaintiffs would mean that defendants are responsible for ensuring the legality content on their platforms. The decision would define the extent of this responsibility. There are several potential ways for businesses to comply with such a ruling.
Alphabet, Apple and Meta do not want to get into regulatory affairs
In theory, the defendants could perhaps avoid culpability by no longer taking a percentage of in-game transactions and simply acting as a disinterested editor. However, this would defeat the purpose of the platforms for these companies. Such microtransactions are a important source of income for them.
A CNBC analysis suggested Apple made over $85 billion on sales in the App Store in 2021, for example. Naturally, not all of this money came from microtransactions in gaming apps. This, however, highlights the value of the platforms for businesses.
Another potential route to compliance would be to restrict access to gambling on platforms such as iOS app store only regulated applications in appropriate jurisdictions. This would, however, require much more active monitoring and screening of corporate parties.
Since gambling is largely regulated state by state in the United States, precise user location would become an important consideration when accessing marketplaces like Google Play.
Technically, it is not illegal to download an unlicensed game application onto a device in the United States. The activity that may be illegal is actually betting real money while playing games on such apps. Alphabet, Apple and Meta understandably do not want to embark on the task of determining whether each attempted transaction is legal in the users’ jurisdictions.
If this lawsuit were to succeed, it could become a consideration for companies to some extent, regardless of their wishes. How they do this could affect user experiences when it comes to gambling on computers, smartphones and tablets in the future. For now, everyone is waiting for an upcoming dissertation on Section 230 from the 9th Judges.
