U.S. Central California District Court Judge James Selna granted Sweepstakes Limited’s motion to compel arbitration.

This was after California resident Dennis Boyle sued the company, alleging it was running an illegal gambling website in violation of the state’s Unfair Competition Law and Consumer Legal Remedies Act.

The lawsuit claims that Stake.us’ currency system, which uses virtual coins or tokens, functions as real-money gambling as opposed to a promotional sweepstakes platform.  

Boyle’s complaint was initially filed in Orange County Superior Court in February but was later transferred to federal court. Subsequent efforts by Boyle to return the case to the state court were denied.

Stake.us Arbitration: Federal Judge Finds No Evidence

Stake.us argued that Boyle, an admitted gambling addict, agreed to arbitrate all disputes when he created an account with the company on Nov. 29, 2022, and accepted its terms and conditions.

While the agreement included an opt-out provision for arbitration, the company said Boyle did not provide any written notice, thereby confirming his acceptance of the terms and conditions.

According to the court, the arbitration clause “clearly and unmistakably” delegates the question of arbitration to the arbitrator, not the court. Boyle challenged the validity of the arbitration clause, claiming it was unconscionable and part of an allegedly illegal contract.

However, the judge found no evidence to support those claims.

“The Court can only conclude that there is no procedural unconscionability as Boyle has failed to meet his burden,” the judge ruled.

As a result, the judge ruled that Boyle must arbitrate his claims with Sweepstakes Ltd.

Advocacy Group Celebrates Ruling

The Social and Promotional Games Association (SPGA), an advocacy group for representing sweepstakes and social gaming platforms, celebrated the ruling in a statement.

“This ruling affirms what we’ve long said: Social sweepstakes sites are not gambling.”

“They are free-to-play games enjoyed responsibly by millions of American adults, and no purchase is ever necessary to play or have a chance to win prizes,” continued the group. 

The SPGA continued: “Anyone can file a lawsuit making any claims they like. This ruling is a reminder that facts — and the law — still matter.”   

Sweepstakes Casinos Continue to Attract Regulatory Pressure

A separate lawsuit in Alabama also centers on allegations that Stake.us is deceptively marketing itself as a legal sweepstakes platform.

Laura Hall, her minor child, and other affected Alabama residents are named as plaintiffs in the complaint, which was filed last month in the U.S. District Court for the Northern District of Alabama.

Hall claims that Stake.us, which allows users to play casino-style games such as slots, blackjack, roulette, and poker, operates similarly to internet café gaming establishments, which have been shut down throughout the U.S.

“Stake will ask the Court to disbelieve its own eyes and conclude that Stake.us is not really a gambling operation, but instead offers legal ‘sweepstakes,’” the lawsuit states. “That is an old gimmick that was once popular among criminals in the early 2000s.” 

Instead of real money, sweepstakes gaming sites allow players to use virtual currencies such as coins or tokens, which can then be exchanged for prizes or additional credits.

The complaint also claims that Stake.us operates under the guise of Sweepstakes Ltd. and promotes over 200 games, including slots, poker, and table games.

Anti-sweepstakes bills have already been filed in 12 states. Last month, Montana became the first state to ban sweepstakes casinos. In addition, both Louisiana and Nevada are set to join Montana, with bills awaiting their respective governors’ signatures. 

The post Federal Judge Sends Stake.us Gambling Lawsuit to Arbitration appeared first on CasinoBeats.

Senate Bill 1235, which passed the state’s Judiciary Committee by a 37-0 vote last month, was reported favorably out of the Legislative Commissioners’ Office on Monday and now heads to the Senate. 

The Joint Committee on General Law unanimously approved the bill, 22-0.  

SB 1235 prohibits online sweepstakes casinos, lottery ticket resales, and ticket courier services.

The proposed legislation, recommended by the Connecticut Department of Consumer Protection (CDCP), states that anyone caught operating an illegal gambling business is subject to a Class D felony. Those crimes are punishable by up to five years in prison and a $5,000 fine.   

Connecticut Regulators Seek Sweepstakes Ban to Safeguard Citizens

SB 1235 states that “No person shall conduct or promote a sweepstakes or a promotional drawing authorized by the provisions of section 53-278g that (1) is not related to the bona fide sale of goods, services or property, (2) uses a simulated gambling device, or (3) allows or facilitates participation in any real or simulated online casino gaming or sports wagering, unless such person is licensed under chapter 229b.”

Sweepstakes gaming allows customers to use free virtual currencies — usually coins or tokens — to play online casino games. Customers can then purchase more credits and exchange them for cash and prizes.

While such platforms are widely available, they tend to operate in a legal gray area. Because they are not regulated, sweepstakes casinos do not offer the same safeguards as traditional legal casinos.

States like Connecticut and New Jersey, which offer legal iGaming, have expressed concern about sweepstakes casinos taking in money that would otherwise be going to taxed and regulated operators.

States Mounting Push Against Sweepstakes Casinos

Several sweepstakes casino operators—including High 5 Casino, McLuck Casino, and NoLimit Coins—have recently left New York in response to a bill seeking to ban them.

SB 5935 threatens fines up to $100,000 and loss of licensing for anyone found guilty of supporting or facilitating online sweepstakes gaming in the Empire State.   

States that have pushed similar bans include Maryland, Mississippi, and New Jersey.

According to the American Gaming Association (AGA), $109 billion was bet on illegal and unregulated operators last year.

Courier Services Also Under Fire

The bill also calls for a restriction on courier services — third-party vendors that purchase lottery tickets on behalf of their patrons.  

Last week, the Texas Lottery Commission voted unanimously to ban them following two controversial lottery jackpots.  

The post Connecticut Bill to Ban Online Sweepstakes Casinos Heads to Senate appeared first on CasinoBeats.