Federal Judge Sends Stake.us Gambling Lawsuit to Arbitration

A lawsuit against sweepstakes casino operator Stake.us is headed to arbitration following a ruling by a federal judge in California.

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.