A lawsuit has been filed in federal court alleging that Stake.us, an online sweepstakes casino, is operating an illegal gambling website in California.
A lawsuit has been filed in federal court alleging that Stake.us, an online sweepstakes casino, is operating an illegal gambling website in California.
The complaint, filed by Dennis Boyle, claims the platform violates state law by offering casino-style games to California residents.
It follows widespread pushback against sweepstake casinos throughout the US, with many leading providers facing lawsuits in state and federal courts amid disputed claims that sweepstakes constitute unlawful gambling.
Proponents of the vertical say that sweepstakes operate legally under an established framework, and despite legal challenges in some states, the companies continue to operate unchallenged across the majority of the US.
A Stake spokesperson told NEXT.io: “Courts in the state have generally supported the legality of social casino and promotional sweepstakes models like ours, and we’re confident the legal process will reflect that.”
Stake.us is the US brand of global cryptocurrency giant Stake.com, which is widely recognised as one of the world’s largest private online gambling companies by revenue.
Stake.us’s business model is the main issue in the case, which, as a sweepstake-based site, uses a “Gold Coins” and “Stake Cash” system that the plaintiff alleges is essentially real-money gambling.
According to the complaint, users can purchase Gold Coins and receive Stake Cash, which can be redeemed for prizes including gift cards and cryptocurrency.
Boyle, who claims to struggle with gambling addiction, also argues that the website specifically targets California residents.
The complaint points out that Stake.us asks users to disclose their state during registration and has privacy policies tailored to California residents.
Gaming law expert and prominent sweepstake casino critic Daniel Wallach told NEXT.io: “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.”
Wallach argued that California provides plaintiffs with significant legal advantages in sweepstakes litigation due to its well-established case law on “consideration.”
He also claimed California courts have consistently ruled that when there’s a direct correlation between money spent on products and the number of sweepstakes entries received for casino-style games, this satisfies the crucial “consideration” element needed to classify an activity as illegal gambling.
Lawsuit says Stake.us algorithms ‘not random’
The lawsuit also alleges that the platform uses deceptive practices to maximise addiction and revenue, including algorithms that are not truly random and “play-through requirements” that encourage continued gambling.
Further, the suit alleges violations of California’s Unfair Competition Law, with Boyle’s attorneys arguing the website operates without proper registration or licensing.
As such, the legal action seeks to void any contracts with the platform and obtain injunctive relief to stop Stake.us from operating in California.
A common theme in sweepstakes casino legal cases is the defendants aiming to move the case to federal court, where plaintiffs face many more hurdles for success.
This occurred in this lawsuit, which was originally filed in Orange County Superior Court, before being removed to the federal system.
Currently, the plaintiff is arguing the case should be remanded back down to the lower court “where it belongs”.
In its response, Stake opposed this, arguing the plaintiffs are “requesting that the court intervene in the free market to prevent the people of California from enjoying the social gaming product and services”.