California-Based Stake.us to Proceed Following Lawsuit Escalation, Heading Towards Arbitration
Sweeps Casinos Breathe a Sigh of Relief in California
Sweeps casino Stake.us managed to dodge a lawsuit this week, allowing them to keep running in California for the moment.
A federal judge turned down resident Dennis Boyle's lawsuit against the company, who claimed Stake.us was operating illegally in California. Boyle, a self-proclaimed problem gambler, has also sued other sweeps casinos.
Stake.us argued that the issue should be settled through arbitration, as Boyle had agreed to the terms of service (T&C) and hadn't opted out of arbitration. The court agreed, scoring a small victory for sweeps operators in the state and beyond.
Arbitration Ahead for Sweeps Disputes
Boyle's lawsuit has increased interest in the sweepstakes industry in the U.S. Sweeps casinos aren't regulated by state law, but they aren't formally banned in the majority of U.S. states either. The industry has experienced significant growth as states have been slow to legalize online gaming.
The company argued that Boyle's grievance wasn't suitable for a judge because the T&C required arbitration. The court concurred, reasoning:
"This Court declines to rule on the issue of illegality, instead leaving it to the arbitrator in the first instance. The Court also avoids addressing the illegality of the contract due to [Stake.us'] corporate status under similar grounds. Whether the contract is void for illegality remains a question for the arbitrator."
Industry Association Cheers the Decision
The Social & Promotional Games Association, an organization advocating for social and sweeps casinos, praised the decision and dubbed it a "landmark case."
In a statement, the SPGA stated: "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."
"Lawsuits can be filed by anyone making any claims. This ruling acts as a reminder that facts and the law still matter."
Similar Cases Could Follow
Boyle has also filed a lawsuit against social casino platform Pulsz in California. That case had been put on hold but could lead to the same outcome.
A lawyer writing for LegalSportsReport.com suggested Boyle might even withdraw his efforts to shut down Pulsz on similar grounds.
"Given the recent outcome regarding Boyle's case against Stake.us, it wouldn't be surprising if Boyle elected to voluntarily dismiss his action against Pulsz to pursue arbitration without a court order," Alan Wilmot wrote.
The Future Remains Uncertain
Though sweeps operators can feel reassured by the T&Cs holding up against disgruntled customers, their future in the U.S. is far from secure.
As recently as last month, Montana became the first U.S. state to formally ban sweepstakes casinos. Gov. Greg Gianforte signed SB 555 into law, set to take effect on Oct. 1.
State Sen. Vince Ricci, who presented the bill in April, said the new law would provide the Department of Justice with additional tools to target illegally operating online casinos. Popular platforms like Chumba and Luckyland Slots have already shut down their operations in Montana.
- The decision regarding Dennis Boyle's lawsuit against Stake.us has sparked interest in the sweepstakes industry, with online casinos like Pulsz potentially facing similar cases.
- The Social & Promotional Games Association (SPGA) has praised the recent ruling, claiming that sweepstakes casinos are free-to-play games, not gambling, and that facts and the law should still matter.
- However, the future for sweepstakes casinos in the U.S. remains uncertain, with Montana becoming the first state to formally ban these casinos, and other states potentially following suit.
