Amazon $200M gambling settlement targets developers

Amazon and consumers suing the company have asked a federal judge in Washington to give preliminary approval to an unusual class-action settlement that would allow consumers to seek more than $201 million from app developers instead of collecting directly from Amazon.

The no-opposition motion, filed July 9 in the U.S. District Court for the Western District of Washington, will resolve claims that Amazon violated Washington’s gambling law and the state’s Consumer Protection Act by processing payments for virtual casino chips sold in more than 200 social casino apps on the Amazon Appstore. Amazon denies wrongdoing and liability, but does not oppose the requested procedural steps.

« The Proposed Settlement turns difficult and risky litigation into a clear path to financial recovery whereby settlement class members can recoup the same portion of costs as under previous developer settlements – resulting in life-changing sums for settlement class members with the highest cost levels. » – Stephen Horne et al. against Amazon

The lawsuit began in November 2023, when plaintiff Steven Horn alleged that Amazon served as the exclusive payment processor for in-app chip purchases while keeping a 30 percent commission from each transaction. The complaint alleges that Amazon shares liability with the developers because it helped facilitate transactions involving games that allegedly qualify as illegal gambling under Washington law. Amazon disputes those claims and says, among other defenses, that Section 230 of the Communications Decency Act shields it from liability.

Amazon’s gambling agreement shifts claims to developers

Instead of requiring Amazon to pay the full amount, the parties are offering a judgment of $201,355,607.75, reflecting 30% of the social casino app class costs. Amazon will provide $2.5 million to administer the notice and settlement. In exchange, class members would agree not to enforce the judgment against Amazon. Instead, Amazon will assign its contractual rights to damages against 32 app developers to a litigation trust that will pursue those companies and distribute any money recovered to the class.

The plaintiffs told the court that the settlement recognizes Amazon’s separate legal position because it can raise defenses, including Section 230 immunity, that developers typically cannot. They argue that the settlement allows consumers to pursue « the same percentage of alleged class damages » achieved in earlier developer settlements, while reducing the uncertainty and delay of ongoing litigation. Court documents say six previous settlements involving social casino developers returned more than $650 million to users.

The offer also includes future changes for participating apps on the Amazon Appstore. Developers will need to let players continue after running out of virtual chips without requiring another purchase. They will also need to provide spending limits, purchase blocking tools and options to suspend or close accounts. Amazon will remove non-compliant applications.

The lawsuit in Washington comes as other tech companies continue to face similar legal challenges. Apple, Google and Meta are defending lawsuits alleging they profited from gambling-style apps on their platforms through payment processing and commissions. Reuters reported that U.S. District Judge Edward Davila rejected their motion to dismiss those claims entirely on Section 230 grounds, allowing the litigation to continue while leaving room for future appeals.

The plaintiffs are now asking Judge Robert S. Lasnick to certify the settlement class, approve the notification plan, grant preliminary approval and schedule a final approval hearing. Amazon continues to deny liability but “does not object to the specific relief sought” in the motion.

ReadWrite has reached out to Amazon for comment.

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