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

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

The agreement in principle remains contingent on final court approval by the US Federal District Court for the Western District of Washington.

Under the terms of the settlement, which will take effect only after final court approval 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, after beginning play two years ago via iPhone, lost more than $3,000 after “regularly paying real money to purchase virtual chips,” filed the lawsuit with the US District Court for the Western District of Washington, seeking redress against Big Fish Games, Aristocrat Technologies and CDI.

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

In the ruling it was stated that plaintiff Cheryl Kater was alleged to have lost in excess of $1,000 worth of virtual chips while playing Big Fish Casino, with it 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.”