The Roblox illegal gambling lawsuit will proceed

The plaintiffs argue that Roblox is allowing and benefiting from an illegal gambling ring that is preying on minors.

Roblox
2

Roblox is an immensely popular online game where users can play all variety of player-made creations. However, a recent lawsuit has been brought against the company that accuses it of benefiting from an illegal gambling ring that preys on minors. The court notes that harm is related to Roblox being the payment processor, effectively taking a cut of transactions that occur in these gambling games.

On April 1, 2024, Eric Goldman of Technology & Marketing Law Blog reported on the court’s decision to proceed with the suit against Roblox. The company had asked the judge to dismiss the case on the grounds of Section 230. This section protects interactive computer services from being liable for third-party content published on its platform.

The court noted that the lawsuit is not in relation to said section and instead Roblox is facing this lawsuit for “allegedly facilitating transactions between minors and online casinos that enable illegal gambling, and for allegedly failing to take sufficient steps to warn minors and their parents about those casinos.”

Here is how the process works: Roblox’s minor users first purchase Robux through the Roblox website, using either their own money, a parent’s credit card, or gift cards they possess. Next, the minor user navigates to one of the Gambling Website Defendants’ virtual casinos that exist outside the Roblox ecosystem. Then, the user links their Robux wallet on Roblox’s website to the gambling website. And finally, once the minor-user’s wallet is linked, the gambling website converts the minor user’s Robux into credits that can only be wagered in their virtual casinos. Throughout this process, Roblox keeps track of all of these electronic transfers and has knowledge of each transfer that occurs in its ecosystem.

Source: Colvin vs Roblox lawsuit

As Gaby Del Valle of The Verge writes, in order to access the casinos, the children would need to purchase the Robux currency from Roblox, and then head to the gambling website to use those digital funds. This is where the complaint’s lawsuit notes that Roblox keeps track of the transactions and would thus have knowledge of where these funds are being spent.

Goldman points out that a company like Roblox, with such a large playerbase of children, is likely to draw more scrutiny from regulators. “These are children we’re talking about,” The court writes. “There is a reason that children are not allowed to gamble, even if they think it will be entertaining: they cannot meaningfully consent to such games, or to the losses that occur as a result.”

The need to protect children online remains important across all platforms and services. Recently, Microsoft was slapped with a $20 million fine and was ordered to improve its child protections after the company was discovered to have collected personal information from children who had signed up to the Xbox online ecosystem without notifying their parents. Given this is how the FTC handles personal data of children, it will be interesting to see how the federal court handles the case against Roblox.

Guides Editor

Hailing from the land down under, Sam Chandler brings a bit of the southern hemisphere flair to his work. After bouncing round a few universities, securing a bachelor degree, and entering the video game industry, he's found his new family here at Shacknews as a Guides Editor. There's nothing he loves more than crafting a guide that will help someone. If you need help with a guide, or notice something not quite right, you can message him on X: @SamuelChandler 

Filed Under
From The Chatty
Hello, Meet Lola