Churchill Downs Incorporated (CDI), the former owner of social gaming studio Big Fish Games, and Aristocrat Leisure, its current owner, have entered into an agreement in principle to settle two class-action suits related to the business.
The pair will create a $155m settlement fund, of which CDI will contribute $124m, with a further $31m paid in by Aristocrat, to refund players that lost money playing Big Fish’s social casino titles.
This follows a ruling by the US Court of Appeals for the Ninth Circuit, which concluded that Big Fish apps such as Big Fish Casino and Jackpot Magic Slots constituted a form of illegal gambling. This came just months after Aristocrat completed its $990m acquisition of the studio from CDI.
The ruling had been issued following a lawsuit filed by Washington State resident Cheryl Kater against CDI in 2015. She argued that, having lost $1,000 playing games, it products constituted illegal gambling under Washington law.
Churchill Downs had acquired Big Fish in a $885m deal in November 2014.
While Kater’s argument was dismissed by the Western District of Washington court, the Appeals Court decided that virtual chips “extended the privilege of playing”, meaning that they could be considered something of value.
As a result of the ruling, other operators pulled their free-to-play casino games from Washington State, while Kater filed a class action suit against the business.
A second class action suit was then filed by Manasa Thimmegowda, who had lost $3,000 playing titles such as Big Fish Casino, Jackpot Magic Slots and Epic Diamond Slots.
Players that have lost money playing on Big Fish titles, provided they do not exclude themselves from the process, will now be able to reclaim money lost playing the games. The agreement was reached through mediation between CDI, Aristocrat and the plaintiffs, and remains subject to approval by the US Federal District Court for the Western District of Washington.
Last week Aristocrat revealed that digital revenue, largely coming through its three social gaming studios Big Fish, Plarium and Product Madness, grew 27.3% to AUD$1.04bn for the six months to 31 March.