CDI And Aristocrat Settle $155m Big Fish Games Litigation

Louisville, Kentucky, headquartered Churchill Downs Incorporated and Aristocrat Leisure have in principle announced a $155 million agreement to settle two lawsuits relating to the former’s divested Big Fish Games.

In January 2018, CDI completed the Seattle-based social games developer’s $990 m sale of desktop and mobile devices to Aristocrat, with both parties now unveiling lawsuits to settle Kater v Churchill Downs, Inc. and Thimmegowda v Big Fish Games, Inc.

The arrangement in principle remains dependent on the US Federal District Court ‘s final judicial approval for Washington ‘s Western District.

Under the terms of the settlement, which shall only take effect after the final approval by the court of the proposed class settlement:

  • A total of $155m will be paid into a settlement fund. CDI will pay $124m of the settlement from its available cash. Aristocrat will pay $31m of the settlement.
  • All members of the nationwide settlement class who do not exclude themselves will release all claims relating to the subject matter of the lawsuits.
  • Aristocrat has agreed to specifically release CDI of any and all indemnification obligations under the stock purchase agreement dated November 29, 2017, between CDI, Aristocrat, and Big Fish Games arising from or related to the Kater and Thimmegowda litigations, including any claims of diminution of value of Big Fish Games and any claims by any person who opts out of the proposed class settlement.
  • The parties have agreed to provide notice to the District Court that the parties have reached a settlement in principle and to request that the cases be stayed pending execution and filing of a formal settlement agreement.

Plaintiff Manasa Thimmegowda, an ex Big Fish Games player who, having started playing on the iPhone two years ago, lost more than $3,000 after “regularly paying real money to purchase virtual chips,” filed a lawsuit against Big Fish Games, Aristocrat Technologies and CDI with the U.S. District Court for the Western District of Washington.

This came a little over a year after the Ninth Circuit Court of Appeal ruled that free-to-play online titles of Big Fish Games constituted illegal online gambling within the state of Washington.

It was stated in the ruling that the plaintiff Cheryl Kater was alleged to have lost more than $1,000 in virtual chips while playing Big Fish Casino, with which he stated in court documents:

“The panel reversed the district court’s dismissal of a purported class action against Churchill Downs, alleging violations of Washington’s Recovery of Money Lost at Gambling Act and Consumer Protection Act, and unjust enrichment; and held that Churchill Downs’ virtual game platform “Big Fish Casino” constituted illegal gambling under Washington law.

“All online or virtual gambling is illegal in Washington. Big Fish Casino’s virtual chips have no monetary value and could not be exchanged for cash, but Big Fish Casino did contain a mechanism for transferring chips between users, which could be used to “cash out” winnings.”