Owner of Robux gambling site must face unfair competition claims by underage users

(CN) — The owner of a now-defunct online casino that targeted Roblox users failed to convince a federal judge to toss the claims brought against him in a proposed class action on behalf of children who gambled away their virtual Robux on his and other websites.

U.S. District Judge Vince Chhabria on Wednesday denied the motion by Boris Said Jr. to dismiss the claims brought under the California Unfair Competition Law as well as negligence and unjust enrichment claims.

While Said argued that his activities weren’t illegal under the California Penal Code — and as such couldn’t be grounds for liability under the Unfair Competition Law — the judge found that, in so far as his RBLXWild site allowed wagering with “things of value,” he operated an unlicensed gambling site under a provision of the state’s penal code.

The judge, a Barack Obama appointee, spent some time in his ruling sorting through what he said were the confusing provisions of California’s penal code and state appellate court decisions to arrive at his conclusion that Robux — the virtual currency that users can purchase on the Roblox platform and use on third-party sites such as RBLXWild — are indeed “things of value” for purposes of the penal code.

However, Chhabria used the opportunity to urge California lawmakers to bring more clarity to the bewildering provisions of the law so that game providers will be able to determine whether their games are considered gambling under the terms of the penal code, particularly given the rapid growth of online games that use virtual tokens and currencies.

“The ambiguity of the phrase ’thing of value’ as used in the California Penal Code is a serious problem because criminal liability hinges on the meaning of this ill-defined phrase,” the judge said. “Indeed, there is a strong argument that these penal code provisions are unconstitutionally vague because they do not provide a person of ordinary intelligence fair notice of what is prohibited.”

Attorneys for Said and for the plaintiffs didn’t immediately respond to requests for comment on the ruling.

Parents sued Roblox in August 2023, arguing in their complaint that their children lost money while gambling with the game’s virtual currency on third-party websites.

The suit claims Roblox knowingly allowed the sites to accept Robux wagers and profited through a 30% fee on currency conversions back into dollars.

While users can’t exchange their Robux for cash, developers who have games on the Roblox platform and operators of the third-party casinos can sell them back to Roblox. Under its Developers Exchange Program, Roblox paid $500 million to game developers in 2021 alone, according to the parents’ complaint.

“It would be strange, to say the least, to conclude that RBLXWild was not operating a game involving a thing of value when it was able to convert that ’thing’—the Robux—to cash. Moreover, it is reasonable to infer from the complaint that Roblox users can be game developers as well, so it seems possible that the people who wager their Robux on sites like RBLXWild may also be able to exchange any winnings for cash,” Chhabria said.

And RBLXWild reportedly made “up to five figures” a day in revenue before it shut down in response to the lawsuit.

In October, Chhabria threw out the unfair competition and negligence claims against Roblox itself, finding that these claims against the platform came down to that it knowingly allowed and profited from the gambling that was happening in the online casinos, not that Roblox was taking steps to help run the online casinos.

Roblox, the judge said, was therefore more akin to a hotel that knows a guest is operating an illicit poker ring in one of its rooms and does not stop it because it’s good for business.

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