Stake.us Faces Lawsuit In California

Dennis Boyle, a California resident, has initiated a series of lawsuits against sweepstakes casino platforms he claims are facilitating illegal gambling activities.

Boyle claims that the system of Stake.us specifically targets Californians with the sweepstakes model, which amounts to real-money gambling.

Stake.us is the US brand of Stake.com, a major crypto betting company. The site uses “Stake Cash” and “Gold Coins” to play online games. Winnings can then be converted to prizes, including cryptocurrency and gift cards.

Backlash against sweepstakes casinos

The lawsuit follows other states taking action against the spread of sweepstakes casinos. Earlier this week, Mississippi lawmakers failed in a bill to ban the online gaming platforms.

Additionally, Arkansas, Florida, Maryland, New Jersey, and New York have all proposed legislation to outlaw sweepstakes this year.

While many states have proposed bills, the format of the platforms often falls outside explicit laws and bills have more often failed to pass. This has led to the continuation of operators such as Stake.us, who claim they are offering legitimate services to users.

Concerning the legal challenge in California, a Stake spokesman said, “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.”

Cashing in on sweepstakes casinos

However, not all courts have found in favor of sweepstakes. A number of lawsuits have been successful and received big payouts. In February this year, High 5 Entertainment paid out $25million in a settlement in Washington State. Last year, Yellow Social Interactive also paid almost $5million in settlements in Kentucky.

Boyle has also filed lawsuits against Yellow Social Interactive this year with similar claims that Pulsz.com is an illegal online gambling platform. The California resident has admitted he struggles with a gambling problem and is seeking compensation for his losses on the platforms.

Boyle filed the original lawsuit in Orange County Superior Court but has been moved to the federal system. This is a common theme in sweepstakes casino legal cases.

Challenge to the free market

Sweepstakes casinos believe it is a federal matter, and the challenges to their operations represent challenges to the free market. Stake commented that the plaintiff is “requesting that the court intervene in the free market to prevent the people of California from enjoying the social gaming product and services”.

For the time being, as long as users are willingly playing on the platforms, it may be difficult for state laws to intervene in the sweepstakes models. In February this year, Stake.us had approximately 23 million visits.

This reflects the popularity of the games across the country. An estimated 55 million Americans participate in sweepstakes games annually and the numbers are going every year. From 2019 to 2023 the sector saw a growth of 75% and is now a $4 billion industry.

Players can get more bonuses and for many gaming online is much more convenient than going to traditional casinos. There are also more payment options with many operators accepting alternative methods such as crypto.

The debate goes on and the courts will no doubt be filled with more cases relating to sweepstakes casinos throughout the year.