Online video gaming platform Roblox is facing a class action lawsuit from parents in the US District Court for the Northern District of California. The suit alleges the game acts as an illegal gambling ring that preys on children.

Online casino in California is yet to be legalized, as is CA sports betting after a vote in November 2022’s ballot was heavily defeated. Operating gambling products to minors is, however, a much broader issue and certainly not legal in the majority, if not all, of the world.

Robox Corp. is a Californian based company and faces heavy pressure for ‘undermining efforts to make the internet safer for minors’. The group was found guilty in May by a compliance group of violating standards for responsible marketing to children by ‘blurring the line between content and advertisements’. This resulted in a complaint by group ‘Truth in Advertising’ to the United States Federal Trade Commission.

The class action suit, brought by Rachel Colvin and Danielle Sass, alleges that the group has violated the Racketeer Influenced and Corrupt Organizations Act, and illegally profited from children gambling. Roblox and Fortnite are two gaming ‘universes’ which allow brands to run events in the game, with the blurring between video game and real-world dubbed the “metaverse”.

The focal point of the allegations center around Roblox’ virtual currency, “Robux”. The actual monetary value, the suit claims, is $0.0125. Users can purchase the currency using debit or credit cards, often tied to parents accounts for traditional fiat currency. Colvin and Sass claim: “Children, who previously could not access the funds to participate in online gambling, now have, collectively, billions of Robux at their disposal”.

Similar to game developer Valve, who faced a similar suit in Washington for ‘skin betting’ allegations, Roblox Corp’s terms of service prohibit “experiences that include simulate gambling, including playing with virtual chips, simulated betting, or exchanging real money, Robux, or in-experience items of value.”

The case argues that these are “misleading”, given that the company has allowed third-party sites to accept bets using the currency. Valve ordered cease & desist orders against 19 skin betting operators in the wake of the case against it.

Roblox, in a statement to Bloomberg Law replied “these are third-party sites and have no legal affiliation to Roblox whatsoever.” It added: “Bad actors make illegal use of Roblox’s intellectual property and branding to operate such sites in violation of our standards”.

Satozuki Limited B.V., Stude Entertainment Ltd., and RBLX Wild Entertainment LLC are also named as defendants in the lawsuit. The case continues to argue that Roblox could halt the “illegal gambling ring”, but argues that due to financial interests it hasn’t. They allege that the 30% fee on the conversion of Robux back into dollars rakes in “millions in annual cash fees.”

Notable influencers in Roblox have also shone a light on these gambling products of late, so the company is under increasing pressure. The case demands a trial by jury.