Live

Watch CBSN Live

Embezzler spent $1 million on video game app purchases

Latest MoneyWatch headlines

The trial of Kenneth Lee Co may be most startling for its lesson on smartphone apps: how addictive “freemium” games can lead to financial and personal ruin. 

Co was working for a heavy-equipment company called Holt of California when he started an embezzling scheme. The financial executive eventually stole almost $5 million from the company, according to his December 8 guilty plea in California federal court, which was published by Ars Technica. Co spent his ill-gotten gains on many of the usual luxury items, including flashy cars and season tickets for the Sacramento Kings and San Francisco 49ers. But one expense stands out: $1 million in purchases on the app “Game of War.”

A look at video game "fight nights"

The mobile video game may be most familiar to consumers for its splashy 2015 Super Bowl commercial, a “Game of Thrones”-esque spot featuring model Kate Upton. The game also seems compellingly playable, keeping players hooked while asking them to pay more to continue. One gamer who spent $9,000 on Game of War wrote on Cracked.com that the app is “gaming’s Manhattan Project,” referring to the team that created the first nuclear weapons. 

“Every time you fire up Game Of War, it’s like stepping into a casino, and that’s not counting the fact that it actually contains a casino,” gamer Jason Croghan wrote about spending $9,000 on the game. “Ads for special events, which you generally need to spend money on to succeed, also bombard you with all the nuance of a shotgun to the face.”

To be sure, Co’s spending on Game of War is unusually high, with Slice Intelligence reporting that the game’s players spent an average of $550 on in-app purchases in 2015. That’s more than five times what the typical mobile gamers spend per year, at about $87 each. Game of War players spend most of their money to buy “gold,” with the average item price at about $52, Slice Intelligence notes. 

Could video games help kids shed extra pounds?

Co’s plea didn’t explain how he racked up such a huge tab on Game of War, but it’s fair to assume he spent a significant amount of time on the app. Croghan noted that he spends half an hour each morning, five minutes each hour at work and whenever he has a free moment playing the game. 

“I would add all that up, but I would be scared to look at the result,” he noted. “Had I known about the time commitment, I never would have started.”

What other games are big money suckers? Ten other games are profiting from players who spend an average of at least $100 per year, according to Slice Intelligence. Gamers who play Summoners War and Big Fish Casino Free Slots spend an annual average of $272 and $233, respectively, making them the games with the second- and third-highest spending customers after Game of War. 

As for Co, who pleaded guilty to wire fraud and money laundering charges, he faces a maximum 20-year term in prison and has agreed to repay $4.54 million to his former employer.

View CBS News In