Parents accuse Roblox of negligence over in-game currency used by children in online casinos

SAN FRANCISCO (CN) — Parents who sued the online gaming platform Roblox in a class action argued at a hearing Thursday morning that the company was negligent and committed fraud against their children when it failed to warn them that Robux, Roblox’s in-game currency, could be used as currency in third-party virtual casinos.

Roblox had tried to get those claims dismissed, arguing it was not responsible for off-site Robux transactions.

In their complaint, the parents claim that Roblox knowingly allowed third-party gambling websites to accept wagers using Robux. And since the company charges a 30% fee to convert Robux used on gambling websites back into dollars, Roblox made millions of dollars in the process, they said.

The plaintiffs accused Roblox of violating federal anti-racketeering law and several state statutes and have demanded a jury trial. U.S. District Judge Vince Chhabria, an Obama appointee, tossed the RICO claims in March but ruled that Roblox was in fact negligent and had violated California’s Unfair Competition Law.

In court documents, Roblox argued the plaintiffs could not bring negligence claims against Roblox over children losing Robux on playing illegal gambling games on off-platform sites. Any injuries came from the virtual casinos and not Roblox itself, the company argued.

But at Thursday’s hearing, plaintiff lawyer Ezekiel Ward told Chhabria that the amended class action complaint contains information about methods of communication that Roblox had with children — communications in which it could have warned them about gambling, he said.

“So you’re saying what Roblox should have done is disclose to the children, that if you sign up for Roblox and you start using Robux on our site, you might be lured by an illegal gambling operation, and you may end up gambling on that and losing all your Robux?” Chhabria asked.

“That’s correct, your honor,” Ward replied.

Chhabria seemed confused by Ward’s argument, noting that a relevant part of the legal complaint had focused on how Roblox communicated with parents — not with children.

“Paragraph 15 appears to be about speculation about how Roblox communications may have reached the parents." Chhabria said. "Now, you’re saying the claim is that Roblox defrauded the children?”

“It adequately establishes that there were instances in which the children necessarily communicated with Roblox, and where if Roblox had made these disclosures about gambling, children would have seen them and would have been able to rely on them,” Ward responded.

Tiana Demas, counsel for Roblox, said that Ward was attempting to make the case about the children being defrauded because the only plaintiffs who claim they relied on any omission were the parents, who agreed to Roblox’s terms of use and are bound by an arbitration clause.

“The problem is the complaint doesn’t allege fraud on the children, nor could the court logically draw that inference because the complaint is littered with screenshots from the virtual casinos that the children allegedly went to that say: 'You have to be 18 or older,'" Demas said. "That provided examples of clear disclosures that the children would have seen and ignored."

Demas said that the plaintiffs were asking the court to infer that Roblox knows illegal conduct is happening but is doing nothing, which she said was illogical.

“There’s clearly an effort to detect and block suspicious transactions," Demas said. She said plaintiffs were asking the court to infer that Roblox "knows that these are virtual casino transactions."

“It’s not just about foreseeing, it’s about knowing that it’s actually happening,” Chhabria said. He said that if Roblox were an amusement park, there would be no question that it needed to protect its guests.

“Why should a virtual world be any different?” Chhabria said.

Chhabria also said Demas’ argument conflated the question of whether there’s a duty to prevent harm with the question of whether that duty was violated. He said it was “hard to swallow” the argument that Roblox didn’t have a duty to prevent harm.

“The idea that you have no duty to protect the people who you invite in and make a bunch of money off of when they participate in this virtual world seems strange to me,” the judge said.

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