SAN JOSE, Calif. (CN) - A judge dismissed multiple class action claims against three tech giants, allowing the companies to continue processing payments and receiving commissions from "social casino" apps played on their platforms. 

U.S. District Judge J. Edward Davila granted the dismissal of a series of fraud claims against Apple, Google and Meta from consumers who say the companies unlawfully support third-party gambling apps.

In the sprawling multi-district lawsuit, the plaintiffs claimed the companies violated federal law as well as state gambling and consumer protection laws, asserting the apps function as tools for illegal gambling and the companies illegally provided the makers of casino-style gambling apps hosted on their platforms with customers' data to help target vulnerable people with gambling addictions in exchange for a share of the profits.

The companies offered payment and processing services to app developers so they may be used on their platforms.

Davila, a Barack Obama appointee, noted in the Tuesday ruling that processing payments doesn't equate to "publishing activity," and the companies cannot be held liable as publishers of the apps.

"Payment processing is not an act of publishing," he said. "It is a transaction, one that is 'distinct, internal, and nonpublic.' Of course, payment processing activities may be an important part of publishing activity. But that does not make payment processing a publishing activity. Instead, it is better viewed as a generic business activity common to virtually all companies, publishers or not, just like hiring workers or paying taxes."

Primarily, the tech companies argued for their immunity in a March hearing under Section 230 of the Communications Decency Act, which courts generally have interpreted to shield Internet companies from liability for third-party content created by users. The law is meant to prevent a deluge of lawsuits from anyone who feels wronged by something someone else has posted online.

Dismissing federal racketeering claims, Davila said "plaintiffs allege merely that defendants have the authority to withhold certain payments that have been processed. Plaintiffs never state that defendants have leverage that authority into control or influence over the enterprise."

When it came to state gambling loss laws, which allow plaintiffs to recover losses from winning parties under certain circumstances, the companies argued they were not "winners" and thus could not be sued under the statutes. In the same vein, they maintained that their 30% commission isn't a portion of the "winnings" either.

The Silicon Valley giants disputed that user activity on the social apps amounted to gambling and stated that it didn't take a portion of any "winnings" - only a commission fee of up to 30% on all in-app purchases, including the virtual currency needed to play the slots.

Though Davila noted variation for the individual state claims brought by 26 plaintiffs from 19 states, he said they overall match Illinois' construction of gambling loss laws, which establish that a defendant must be an actual party to the gambling to be considered a winner.

"A person cannot be a winner under any of these states' laws without risking a loss in a game, wager, or bet," Davila said. "When defendants receive their commission from purchases of virtual chips, those commissions are not contingent on the outcome of any slot machine spin, game, wager, or other bet. There is no risk that defendants will lose those commissions, so they are not winners."

Attorneys representing Apple, Google, Meta and the plaintiffs did not immediately respond to requests for comment.

The plaintiffs detailed their claims against all three companies through an amended master complaint in November 2024. All three tech companies moved to dismiss the case later the same month.

In separate lawsuits filed mid-2021, 26 plaintiffs from 19 states say the casino-style apps, which operate across state lines through the Apple App Store, Google Play Store and Facebook platforms and style themselves after Vegas-style slot machines, constitute an "illegal internet gambling enterprise" that's even worse than in-person casinos - they have access to detailed consumer data facilitated by their platforms, making them "extraordinarily profitable and highly addictive."

The Ninth Circuit heard an appeal of a previous motion to dismiss this case in April 2024.

Casino-style apps have risen in popularity in recent years, particularly on mobile platforms. In 2020, consumers purchased an estimated $6 billion in social casino virtual chips. Of the top twelve grossing apps available on Facebook in 2021, nine were social casinos.

Source: Courthouse News Service