SAN FRANCISCO (CN) — Gaming company Roblox asked a federal judge Thursday to toss claims that it profits from allowing third-party gambling websites to accept online bets using its gaming currency, potentially letting children who play Roblox gamble virtually.
Roblox made its bid to dismiss the class action brought by parents before U.S. District Judge Vince Chhabria in San Francisco. Rachel Colvin and Danielle Sass sued the company in August 2023, claiming their children have been using third-party gambling websites to place bets using Robux, Roblox’s in-game currency, and have lost money. They say Roblox illegally profited from children’s gambling by charging a 30% fee when gambling websites convert funds won into dollars, allowing it to earn "millions in annual cash fees."
The plaintiffs also say that Roblox can track electronic transfers made on third-party gambling sites because many allow users to link their Robux wallet to the platform.
Chhabria, a Barack Obama appointee, said he thought the plaintiffs’ complaint is vague on how much children communicate with casinos to gamble, although clear that “Roblox is knowingly exchanging cash for Robux with these casinos, and taking a cut of those dollars.”
“It seems like what you are describing are interactions between casinos and the kids, that Roblox is fully aware of and perfectly happy to profit from the websites’ exploitation of the Roblox ecosystem,” Chhabria said.
He said the plaintiffs need to do more to show if, when Roblox’s normal operations are used to engage in criminal activity by a third party and the company is fine with it, it is enough to include Roblox in a RICO enterprise claim.
“If somebody comes to a bank and engages in a normal transaction, but the bank happens to know that this entity engaging in this transaction is doing so to launder money or further some criminal endeavor … does the bank, just by merely knowing that its normal processes are being used to further this criminal activity, become part of a RICO enterprise?” Chhabria asked.
The plaintiffs argued Roblox allows casinos to move users and their purchases off of its platforms, knowing that the majority of Roblox players are under the age of 16 and not legally able to gamble.
Roblox attorney Tiana Demas said the plaintiffs have failed to claim every aspect of a RICO violation, including proving that Roblox is aware of accounts engaging in suspicious behavior.
Chhabria asked Demas if, based on the names of the casino websites — RBX Flip, Box Flip and RBLX Wild — anyone would believe that Roblox is not aware of their behavior when the casinos use the Roblox brand. When Demas said Roblox is not arguing that it is not aware of the websites, the judge said in that case Roblox is aware of their behavior.
Demas said that the system is no different from what every developer working with Roblox does.
“Roblox does not have the ability to control the independent actions of its users,” Demas said. “At every single stage, this is consistent with normal business conduct. In all of the RICO cases we cited there has to be an allegation that the defendant participated in the enterprise’s affairs, not just its own affairs.”
When Chhabria reminded her that the plaintiffs claim that the children lost money by being lured into an illegal gambling enterprise where they lost Robux, Demas said claiming a loss of something through Roblox does not constitute a Unfair Competition Law violation either. Chhabria seemed to disagree, saying that to be liable a defendant has to have taken something of value.
The judge also disagreed with Demas’ argument that she cannot say if it is illegal for third-party websites to take Robux as currency from a child who wants to gamble.
Demas cited precedent like Rodriguez vs. Topps Co., saying, “The act of gambling is not enough per se to show the injury of one’s business through RICO.”
Chhabria said it is key to focus on the age of the users who claim financial losses, since “they’re not at an age where they can make that kind of decision.”
The judge indicated he is inclined to let the negligence claim proceed, since he thinks that Roblox may owe a duty to the children who suffered financial losses.
“Roblox can easily prevent these children from being preyed upon by these sites, and it is not doing so,” he said, but conceded that the plaintiffs did not fully meet the requirement to argue that point.
Chhabria said he will issue a ruling soon.
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