Lawsuit Against Stake in California: Illegal Gambling or a Legitimate Model?
What Happened?
A lawsuit has been filed in a federal court in California against the operator of Stake.us. The plaintiff accuses the company of illegal online gambling disguised as a sweepstakes model.
This is not the first lawsuit against such platforms in the U.S., yet operators continue to function, citing the legality of their business models.
The Allegations
Stake.us operates under the following scheme:
- Users purchase Gold Coins — a virtual currency that is not intended for betting.
- As a bonus, they receive Stake Cash — another virtual currency that can be exchanged for real prizes, including cryptocurrency and gift cards.
- The lawsuit claims that the platform’s algorithms are not random and may contribute to gambling addiction.
The plaintiff is seeking a “public injunction” to ban the site’s operations in California.
Legal Precedents
The lawsuit compares Stake.us to illegal internet cafes from the 2000s, where users purchased, for example, internet time and received sweepstakes points in return for participating in gambling games. These schemes were deemed illegal:
| Year | Event |
|---|---|
| 2015 | The California Supreme Court ruled that such sweepstakes games were equivalent to slot machines. |
| 2015 | The state’s Attorney General banned such schemes, and the Bureau of Gambling Control declared them illegal. |
The Future of Stake in California
The defendants are pushing for the case to be heard in federal court, as state district courts often rule in favor of consumers. The plaintiff, on the other hand, insists on returning the case to a California court. Meanwhile, the platform continues to operate by leveraging legal loopholes.
The situation with sweepstake casinos remains tense, and the outcome of this case could impact the entire online gambling industry in the U.S.