Sweepstakes operators have been named in dozens of consumer lawsuits across the country, but a new filing against Stake.US comes from a more formidable foe.
The Los Angeles City Attorney Hydee Feldstein Soto’s office has filed suit (view the full suit here) against not just sweepstakes gaming operator Stake.US but a range of the company’s top suppliers and the streaming service Kick.
LA attorney says Stake.US guilty of false advertising
Filed in Los Angeles Superior Court, the suit alleges that Stake.US is operating a de facto illegal gambling site and, in addition to violating several state laws related to gambling and the Unlawful Internet Gambling Enforcement Act (UIGEA) is also in violation of the states Unfair Competition and False Advertising Laws. Since the group is in violation of the latter two statutes, the city attorney says she has the right to step in on behalf of residents of Los Angeles.
The lawsuit is seeking treble damages and for the court to enjoin both the suppliers and Stake.US from advertising and offering the product in California.
The content of the suit is similar to most other lawsuits against sweepstakes gaming companies. It argues that the dual-currency system Stake.US offers is simply a workaround to offer real-money gaming. While there are free-to-play versions of the games, the suit notes that the branding and marketing around Stake.US is generally identical to its real-money counterpart available elsewhere around the world, Stake.com.
City also targeting game studios, compliance supplier
The co-defendants on the suit include a number of recognizable suppliers. The sit names Veriff, a KYC solution, as well as a number of game studios. The game studios listed at plaintiffs include:
Pragmatic Play
Evolution
Big Time Gaming
Red Tiger
NetEnt
No Limit City
Hacksaw Gaming
Big Time, Red Tiger, NetEnt and No Limit City are all subsidiaries of Evloution Gaming.
The suit names a range of companies related to both Evolution and Hacksaw and alleges that even though they are different entities, such as Evolution US and Evolution Malta, they operate as one in the same.
The suit also alleged that these game studios and suppliers knowingly enabled smaller game creators and themselves to host their games on what the city attorney says is an illegal gambling site.
Many of these operators work with regulated online casino partners in the U.S. and abroad in addition to Stake.US. Evolution’s U.S. partners include FanDuel and BetMGM.
Soto accused of ethics breach in the past
Since taking office in 2023, some have accused Soto of using her post and influence for political interest.
A city attorney who worked underneath Soto in the City Attorney’s office filed suit against her after the attorney was relieved of her position in the office. The attorney, who served in the office for 20 years prior to her departure, said Soto chose cases based on “personal relationships” and “perceived political gain.”
The city of Baltimore filed a similar suit against FanDuel and DraftKings earlier this year, though instead of arguing they were illegal gambling sites, the suit said the advertising for the sites was predatory.
What stands about this action is that it targets both suppliers and streamers in addition to an operator. To date, attorneys general and regulators have sent cease and desist letters to sweepstakes operators but have generally left suppliers out of the equation.
Sweepstakes ban bill set to likely move today
However, if California’s proposed sweepstakes ban, AB 831, advances out of committee today, it gets one step closer to potentially becoming law.
If passed, that bill would criminalize not just operating a sweeps site in the state but alos serving as a supplier or an advertising organization, such as an affiliates.
