A California judge has recently sent a case involving the sweepstakes casino Stake.us to arbitration, citing the terms accepted by plaintiff Boyle upon registration. Boyle had accused Stake.us and its parent company, Sweepstakes Limited, of operating an “illegal gambling website” based on its sweeps model.
He claimed that the platform’s use of Gold Coins and Stake Cash violated California laws after incurring substantial losses. Boyle also mentioned suffering from a gambling addiction.
The judge’s ruling means that the dispute will be resolved outside of court by a neutral third party rather than through a public trial. This is a common outcome in such cases, similar to a past instance involving Fliff.
Stake argued that Boyle agreed to arbitration when he signed up for an account, acknowledging that he accepted the terms and conditions. They highlighted that Boyle had the option to opt-out of arbitration within a specific timeframe but did not submit any request to do so.
Judge James Selna from the U.S. Central California District Court upheld Stake’s stance, stating that Boyle failed to demonstrate any procedural unconscionability. The ruling indicates that arbitration usually favors companies like Stake, as the process remains private, diminishes reputational risks, and presents challenges against unfavorable rulings for plaintiffs.
In a related development, Boyle is also pursuing a similar case against another sweepstakes casino, Pulsz, owned by Yellow Social Interactive. Both parties in that case have requested a 45-day delay pending the outcome of the Stake.us arbitration.
The Social and Promotional Games Association (SPGA), an industry trade group, welcomed the arbitration decision, asserting that social sweepstakes sites should not be classified as gambling. They emphasize that these platforms provide a free-to-play experience enjoyed by numerous adults.
Importantly, the ruling did not address the legality of the sweepstakes model itself but focused on enforcing the arbitration clause in the terms of service. Notably, no plaintiff has successfully proved the illegality of the sweeps format, thereby favoring sweepstakes casinos in California.
Stake continues to confront other lawsuits, including one in Alabama, indicating the ongoing legal challenges for popular operators in the current business landscape.