SAN FRANCISCO (CN) — A federal judge ruled Tuesday that popular online gaming platform Roblox negligently allowed minors to use in-game currency in online casinos, but won't advance racketeering claims against the game.
A class of parents sued in August 2023, claiming that the game acts as an illegal gambling ring for children. According to the parents in their complaint, their children lost money when they wagered Roblox’s in-game currency, Robux, on third-party gambling websites.
The parents claim that Roblox knowingly allowed these third-party gambling websites to accept wagers using Robux, and that Roblox made millions of dollars in the process since it charges a 30% fee on the gambling websites’ conversion of Robux back into dollars.
The plaintiffs accused Roblox of violating the Racketeer Influenced and Corrupt Organizations Act and several state statutes and demanded a jury trial.
U.S. District Judge Vincent Chhabria tossed the racketeering claims but ruled that Roblox was negligent and violated California’s Unfair Competition Law on Tuesday afternoon.
“The baseline rule is that Roblox had a duty to use reasonable care in its conduct, the creation and management of its platform, to avoid creating an unreasonable risk of harm to others,” Chhabria wrote.
The parents detailed the process by which children can use Robux on gambling websites — after purchasing Robux, users can link their in-game Robux wallet to third-party gambling sites outside of the game’s ecosystem. This link allows Roblox to keep track of all electronic transfers, they say.
Roblox had argued that the third-party online casinos should face liability for this, not Roblox, because any economic loss incurred by the parents came as a result of a minor exchanging Robux with an online casino, not Roblox itself.
Chhabria wrote that Roblox’s argument “misunderstands the nature of the complaint.”
“The plaintiffs have alleged that Roblox is knowingly and improperly facilitating and profiting from these online casinos — that forms the basis of the UCL claims against Roblox. Thus, the plaintiffs have alleged that Roblox (as well as the casinos) caused their economic loss,” Chhabria wrote.
Roblox was negligent, Chhabria wrote, when it did not warn parents about online casinos or inform them that it does business with them by converting Robux into dollars for profit.
“The plaintiffs argue that Roblox violated that duty to use reasonable care by allegedly engaging in these currency exchanges with online casinos and by failing to warn parents about the online casinos. Roblox does not argue that it did, in fact, use reasonable care. Instead, Roblox contests only the existence of a duty.”
Chhabria determined that the racketeering claims must be dismissed, however, because the plaintiffs didn't prove there was a criminal enterprise at play, even though plaintiffs had sufficiently shown that Roblox knew its normal processes were being used to facilitate illegal activity.
“To establish the existence of a RICO enterprise, it seems that something more is needed. The complaint alleges only that Roblox is engaged in its ‘own primary business activities.’ There are no allegations of a ‘common purpose or of organized conduct separate and apart from [Roblox’s] ordinary affairs,’” Chhabria wrote.
“The plaintiffs have alleged that Roblox interacts with the representatives of the online casinos the same way that it interacts with other users and developers on its platform," he added. "The only difference alleged is that Roblox knows that the casinos are engaged in illegal gambling activity. If there is a case that stands for the proposition that knowledge is enough to transform ordinary business activities into a portion of a RICO enterprise, the plaintiffs have not provided it.”
The case will now move forward with discovery and Chhabria gave the parties 14 days to file any amended complaints.
Neither Roblox or the the plaintiffs immediately responded to requests for comment before publishing.
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