The blowback faced by sweepstakes and social casinos in the U.S. continued this week after a federal lawsuit was filed in California against Stake.us.
Plaintiff Dennis Boyle is arguing that the platform violates state law and is offering California residents an illegal gambling option. The platform is part of Stake.com, which operates a larger cryptocurrency casino platform worldwide.
“Because social casinos operate as if they are not subject to gambling regulations, they do not comply with the regulations that govern the operation of slot machines or other gambling,” the lawsuit noted.
Lawsuit Alleges Illegal Gambling
Sweepstakes casinos generally allow players to play for free using a virtual currency. They can also purchase additional coins and often receive a separate virtual currency, often known as “sweeps cash” (or “Stake Cash” on this platform). The sweeps cash option allows players to win real cash and prizes on many platforms. The lawsuit alleges that the currencies are merely substituted for actual dollars to allow for real-money casino gaming.
“A user playing promotional games with Stake Cash is gambling in the purest sense – they are wagering something of value (Stake Cash) on a random event with the hope and intent of winning more Stake Cash than wagered,” the suit says.
Gaming law expert and attorney Daniel Wallach said the company might face obstacles in winning the case because of the suit’s location.
“The advantage of suing in California is twofold: the substantive law is perhaps the most plaintiff-friendly in the entire country, and procedurally, there is a vehicle available to plaintiffs that can eliminate or at least shorten many of the delays that are inherent in cases filed outside of California,” he told another media outlet.
Operators argue that their platforms are entirely free for players and that users don’t need to purchase anything to play. The platforms generally use sweepstakes laws to offer games, which they believe should be considered more like traditional mobile gaming.
The lawsuit also alleged that games on the platform aren’t actually random as a way to entice users to play more. The suit seeks to shut down the operator to “prohibit unlawful acts that threaten future injury to the general public as a whole, as opposed to a particular class of persons.”
Stake is one of the few offshore social casinos offering an online poker option. With online gaming not officially legal in California, Stake.us was one of the only options for poker players in the Golden State.
Several states have moved to make sweepstakes casinos illegal recently. New Jersey introduced legislation to ban the platforms and a New York Senate committee approved similar legislation. Maryland went as far as sending a cease and desist letter to one of the largest sweepstakes operators in the world.
The Stake ownership group includes Canadian rapper and gambler Drake as one of the company’s owners. He recently made headlines by renting out a club all to himself to play online slots.
