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 plaintiff Dennis Boyle, claims the platform violates state law by offering casino-style games to Golden State residents.
California Lawsuit Alleges Stake’s Gold Coins And Stake Cash System Is Still Gambling
Stake.us is the U.S. brand of global cryptocurrency giant Stake.com, one of the world’s largest private online gambling companies. Stake.us’s “no purchase necessary” business model for sweepstakes gaming is the main problem in the case. Boyle alleges that the site’s “Gold Coins” and “Stake Cash” system should be classified as real-money gambling.
According to the complaint, players can purchase Gold Coins and receive Stake Cash, which can be redeemed for prizes including gift cards and cryptocurrency.
Boyle also argues that the website specifically targets California residents. The complaint states that Stake.us asks users to disclose their state during registration and has privacy policies tailored to California residents.
In addition, the suit alleges violations of California’s Unfair Competition Law. Boyle’s attorneys argue that Stake.us operates without proper registration or licensing. His legal team seeks to void any contracts with the platform and obtain injunctive relief to prevent Stake.us from operating in the state.
Social casinos operate in a legal gray market. Sweeps operators allow players to engage in virtual casino-style games for free, while allowing them to purchase virtual Gold Coins that can later be redeemed for cash prizes.
Gold Coins and Sweep Coins are available for players to purchase, but neither currency holds real-world cash value. The online gaming platforms label the games “promotional sweepstakes” rather than casino gambling.
Apple And Google Named In Sweepstakes Class Action Lawsuit
However, marketing the sites as “free to play” isn’t enough for some lawmakers, gaming regulators, and regular individuals. For example, tech giants Apple and Google were accused recently of playing key roles in an illegal online gambling operation as part of a new federal class action lawsuit.
The lawsuit was filed under the Racketeer Influenced and Corrupt Organizations Act (RICO). The plaintiffs claim that Apple and Google profited from sweepstakes casinos.
Plaintiffs Julio Bargo, Lamar Prater, and Rebecca Platt of New York allege that the tech firms played a significant role in allowing illegal gambling through sweepstakes casino apps.
According to the lawsuit, Apple and Google are both liable since the companies distributed these apps via the App Store and Google Play, taking a “substantial percentage” of every in-app purchase of virtual coins used.
The tech companies also allegedly processed “illicit transactions” between users and the casinos through their proprietary payment systems, and they used targeted advertising and search algorithms to “shepherd the most vulnerable customers to the sweepstakes casino websites and apps.”
States are taking action against sweeps operators as well. Lawmakers in Arkansas, Maryland, Mississippi, New Jersey, and New York have all introduced legislation to ban sweepstakes so far this year. Last week, New Jersey assembly bill A5447 gained a second sponsor and a counterpart bill in the Senate.