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.

The lawsuit, reported by gambling legal expert Daniel Wallach, was filed last Friday in the US District Court for the Northern District of Alabama. It names Laura Hall and her minor child as plaintiffs, along with other Alabama residents who claim they’ve been similarly affected.

“Stake attempts to separate the element of consideration from chance by offering a two-tiered system of virtual coins, both of which function like casino chips, while calling the whole affair a “sweepstakes,” the lawsuit reads.

Hall contends that Stake continues deceptively marketing itself as a legal sweepstakes platform when it’s an unlicensed provider of casino games. She also claims that her child, who is a minor, “suffered an injury in fact resulting in the loss of money and/or property that is recoverable in Alabama” in the last six months.

This is already the third lawsuit against Stake, which is also involved in cases in California and Illinois.

What is Online Sweepstakes Gaming?

These unregulated platforms allow players to play casino-style games like slots, roulette, and poker, which are banned under Alabama law. However, instead of real money, players can use virtual currencies like coins or tokens, which can then be exchanged for prizes or additional credits.

Because these platforms are not classified as traditional gambling sites, they operate in a legal gray area and have been widely scrutinized by lawmakers and regulators.

Several states — including Connecticut, Louisiana, Montana, and New York — are advancing in legislative efforts to ban them, citing concerns about consumer protection and market integrity.

The lawsuit compares Stake’s operations to internet café gaming establishments, which have been shut down throughout the United States.

“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.” 

Stake.us Rejects Claims of Illegal Gambling

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

On its website, customers are presented with the opportunity to “win big” alongside Canadian rapper Drake, who is described as a “long-time member of the Stake community.”

Stake has fired back at claims it is operating illegally, telling ReadWrite it “does not operate an online casino in Alabama. It operates a social casino with free-to-play games in compliance with all relevant local laws and regulations.”

The post Alabama Woman Accuses Stake.us of Running Illegal Gambling Operation appeared first on CasinoBeats.

Mirroring a similar case filed in California last week, Stake faces a second legal battle, but this time in the US District Court for the Northern District of Illinois.

Filed by Illinois resident Brayden Urdan, the suit primarily targets its sweepstake casino platform, Stake.us. He claims it is operating an unlicensed and illegal online gambling site under the guise of being a “social casino.” 

Dual-Currency System Constitutes Gambling

Central to Urdan’s lawsuit challenge is the platform’s use of a dual-currency system, which he believes is deceptive as users buy “Gold Coins” but receive “Stake Cash” as a bonus. The plaintiff argues that while Gold Coins cannot be wagered, Stake Cash can, and any winnings can be cashed out, effectively qualifying as real-money gambling.

Despite Stake.us advertising claiming that users do not need to purchase to receive Stake Cash, the complaint argues that these procedures are obscure and insufficient for sustained gameplay.

The legal action asserts that while players can technically obtain small amounts of Stake Cash via platform promotions, daily logins, or a long-winded mail-in request process, he maintains most users on the site end up making real money deposits to play. 

Stake Using Misleading Advertising in Illinois

In conjunction with the concerns raised regarding the dual-currency system, the filing also calls into question the operator’s use of celebrity endorsements. Stake uses stars like Drake and UFC star Israel Adesanya to promote both casino platforms. The plaintiff contends that Stake is using high-profile partnerships to actively normalize gambling while masking the risks, packaging it instead as an entertainment app.

Furthermore, Urdan is also seeking financial restitution, statutory damages, and an injunction to halt Stake’s operations in Illinois after claiming to have lost more than $15,000 on the platform since 2022, with $10,000 lost in the past six months.

These losses, he argues, illustrate the social casino platforms’ lack of responsible gambling measures, which should include safeguards, addiction support resources, and self-exclusion tools, which are typically mandated by law for licensed operators.

Illinois a Hotspot for Gambling-Related Class Actions

In light of Urdan’s recent filing against Stake.us, the move has also reaffirmed Illinois’ reputation as a hub for gambling-related lawsuits—due in part to its unique centuries-old statute, the Illinois Loss Recovery Act (LRA).

Under the LRA statute, plaintiffs in the Prairie State are entitled to reclaim three times their gambling losses if the losses stemmed from unlawful betting activities. The only caveat to the application of this statute is that the claimant must file the suit within six months.

The lawsuit in California could impact Urdan’s case in Illinois, as the law firm Edelson PC is challenging it. Edelson is the firm behind a recent prominent court case that secured a $24.9 million win against High 5 Games in Washington state over their comparable social casino model.

With the Washington state ruling against High 5 Games setting a new precedent that non-cashable virtual chips can constitute “something of value” under their state gambling laws, should a similar adjudication be made in California and Illinois, Stake may likely face more legal challenges in the near future.

The post Stake Faces Second Lawsuit Over Alleged Illegal Gambling Practices in Illinois appeared first on CasinoBeats.

The plaintiff, Dennis Boyle, is suing Sweepsteaks Limited, claiming Stake.us constitutes an illegal gambling website. The case alleges that Stake.us is in breach of California civil code, given that it provides unlawful online gambling and engages in unfair business practices. 

Allegations Center on Stake Virtual Currency and Playthrough Rules

The lawsuit was remanded and escalated from state court to federal court. The case centers around Stake’s social casino and sweepstakes product. Boyle alleges that the company provides real-money online wagering under the guise of free gaming. 

Sweepstakes and social casinos effectively use a dual-currency system. In the case of Stake, digital currencies such as Stake Cash and Gold Coins are alleged proxies for real-money wagering as they are used to play promotional games and sweepstakes. 

Boyle’s complaint states: “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.”  

“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 complaint continues. 

It also alleges that Stake’s play-through requirement, tied to Stake Cash, constitutes unfair business practices. Stake’s welcome bonuses and promotional giveaways are subject to a 300% playthrough wagering requirement before any winnings can be redeemed. 

Boyle’s individual claims do not exceed $75,000 in the claim, but the plaintiff is seeking injunctive relief with the shuttering of the site. 

This is not the first lawsuit brought by California resident Boyle. The former gambling addict also has an ongoing case with Yellow Social Interactive, centered around sweepstakes brand Pulsz. 

Boyle also seeks injunctive relief, accusing Pulsz of running operations that constitute an online casino without a license. 

Sweepstakes Casinos Face Rising Scrutiny Nationwide

Online sweepstakes casinos and sports events contracts are under intense regulatory scrutiny across the United States.

Mississippi’s proposed legislation to ban sweepstakes casinos recently died at the Committee level. The Magnolia State Senate was the first chamber in the United States to pass a bill prohibiting sweepstakes casinos. Representatives then amended the wording in early March to include sports betting language. 

Ultimately, the Senate rejected the amended legislation due to the language change. 

The Mississippi Senate became the first chamber in the U.S. to pass a bill banning sweepstakes casinos. In early March, the House of Representatives amended the bill to include language on online sports betting.

After the deadline for conference committee reports, the bill took its place in the legislative graveyard. 

Legislation to regulate or prohibit online sweepstakes casinos is still pending in Arkansas, Florida, Maryland, New Jersey, and New York. As often happens with United States law, if one state sets an example, others may follow in quick succession. 

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