A judge in California sent a lawsuit against Stake.us to arbitration, allowing the sweepstakes casino platform to continue operations in the state.
The lawsuit, filed by California resident Dennis Boyle, alleges that Stake operates an illegal gambling website in violation of state laws. California online casinos have not been legalized, but Stake’s dual-currency system allows players to play casino games for Gold Coins and Stake Cash instead of real money.
Boyle, a self-confessed problem gambler, has filed similar lawsuits against sweepstakes casino platforms as he seeks to recoup his losses. He claims that despite the dual-currency model, Stake should be classed as an online casino, and therefore illegal in California.
Stake argued that Boyle had agreed to the terms and conditions when signing up to the website, and also failed to exercise an opt-out provision of an arbitration clause.
Stake and plaintiff must settle the case in private
The judge ruled that Boyle must settle the dispute privately with Stake’s parent company, Sweepsteaks, and it is not a matter for the courts.
“The Court can only conclude that there is no procedural unconscionability as Boyle has failed to meet his burden,” the judge commented. “Therefore, the Court finds that Boyle must arbitrate his claims with Sweepsteaks.”
This represents a victory for Stake and all sweepstakes casinos in their legal battles. The Social and Promotional Games Association (SPGA) celebrated the ruling, commenting, “This ruling affirms what we’ve long said: Social sweepstakes sites are not gambling.”
An SPGA spokesperson went on to add, “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.”
“Anyone can file a lawsuit making any claims they like,” the statement continued. “This ruling is a reminder that facts — and the law — still matter.”
Stake is also facing lawsuits in Illinois and Alabama over similar accusations that it is flaunting state gambling laws with its business model.
Sweepstakes growing amid legal challenges
A new report showed that sweepstakes casinos are outperforming legal online casinos in the US, growing their player base at triple the rate. Stake is leading the way in the US, despite its Stake.com site being blocked.
Stake.us had over 23 million visits in February this year and on its website claims to be the “World’s Largest Online Casino and Sportsbook.”
Co-founder, Ed Craven, has boasted that, “Stake has hit a point now where I’m confident our betting volume is the highest in the world out of any casino, land-based or online.”
The company generated $4.7 billion in revenue last year, as unregulated gambling operators outperformed regulated platforms. Regulated platforms generated $23 billion in revenue in 2024, up from $16.9 billion in 2023. However, growth in the unregulated sector, including sweepstakes casinos and offshore betting sites, surpassed this increase. Operators generated $67 billion in revenue, up from $40.7 billion in 2023.
Lawmakers and state regulators have been increasing the pressure on unlicensed operators, however. Montana became the first state to officially make sweepstakes casinos illegal, and many other states are debating similar moves in legislative chambers.
The decision in California could set a precedent for other lawsuits against sweepstakes operators, but the battle between regulators and lawmakers looks set to continue across the US.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling. Adam focuses on emerging stories in the ever changing landscape of betting in the US. Read the latest on prediction markets, changing legislation, and sweepstakes.
