Stake.us facing lawsuit over alleged ‘illegal gambling’ website in California

Online sweepstakes casino Stake.us is facing a federal lawsuit which alleges it is operating an illegal gambling website in California.

Filed by Dennis Boyle, the lawsuit alleges that Stake has violated state law by offering casino-style games to California residents.

This lawsuit comes as sweepstake casinos face widespread opposition across the US.

A number of major providers are already facing both state and federal lawsuits, with claims that sweepstakes constitute unlawful gambling.

Despite these legal challenges, operators argue that sweepstakes casinos operate legally under the established framework.

Speaking to NEXT.io, a spokesperson from Stake 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.”

Stake.us forms the US arm of Stake.com — one of the world’s largest cryptocurrency and private online gambling companies.

The biggest issue for Stake.us is that the sweepstakes-based site uses a system called ‘Stake Cash,’ which the lawsuit claims essentially amounts to real-money gambling.

The complaint goes on to argue that users can buy Gold Coins to receive Stake Cash, which can then be redeemed for real-world prizes such as cryptocurrency and gift cards.

Boyle, who filed the lawsuit, claims he struggles with a gambling addiction and that the Stake.us site is targeting California residents.

In the complaint, it is pointed out that Stake.us requires users to disclose their state when signing up, with privacy policies aimed at Californians.

Gaming law expert and sweepstakes critic Daniel Wallach told NEXT.io: “The advantage of suing in California is twofold: the substantive law is perhaps the most plaintiff-friendly in the entire country, and procedurally, there is a vehicle available to plaintiffs that can eliminate or at least shorten many of the delays that are inherent in cases filed outside of California.”

Another advantage of bringing the suit to California is that the state offers significant legal advantages when litigating against sweepstakes due to well-established case law on ‘consideration.’

Another key argument of the lawsuit against Stake.us is that the platform uses harmful, ‘deceptive’ practices that cause addiction. These include algorithms that are not random, with ‘play-through requirements,’ which encourage further gambling.

On top of this, it is alleged that the website violates California’s Unfair Competition Law by operating without proper licensing or registration.

The suit therefore aims to void any contracts and force Stake.us to cease operations on the state of California.

In response top the lawsuit, Stake argued that the plaintiffs were ‘requesting that the court intervene in the free market to prevent the people of California from enjoying the social gaming product and services.’