Update – Days after the lawsuit, Pragmatic Play pulled its games from Stake.us and announced its exit from the sweepstakes market. Other providers did the same but only in California.
The Los Angeles City Attorney has filed a civil enforcement action against popular sweepstakes casino Stake.us and its gaming providers, namely Evolution, Hacksaw, and Pragmatic Play.
While lawsuits against sweepstakes casinos seem to be a dime a dozen these days – with the vast majority falling at the first hurdle – there are a few things that set this new one apart.
- It’s brought by an official government plaintiff (Los Angeles City Attorney Hydee Feldstein Soto) rather than a private individual or class action, giving it added weight. Technically, it’s a civil enforcement action, meaning the plaintiff is seeking to enforce civil laws rather than pursue criminal charges – Feldstein Soto has this authority in her role as LA City Attorney.
- The case names a sweepstakes casino plus its suppliers, which is unusual and could increase pressure on the wider supply chain.
- Rather than trying to frame Stake.us’ operations as illegal gambling, which is what we usually see, Feldstein Soto’s case is made via alleged violations of the Unfair Competition Law (UCL) and False Advertising Law (FAL).
Essentially Feldstein Soto is arguing that Stake.us (operated by Sweepsteaks Ltd.) misleads consumers about the nature of its games and promotions, presenting them as sweepstakes while they function like regular gambling.
Details on the New Lawsuit Against Stake.us
The lawsuit was filed last week in Los Angeles Superior Court, which has jurisdiction over businesses operating within the city and the state of California.
In the introduction, Feldstein Soto makes her case:
“Because Stake.com could not easily enter the U.S. market, where online gambling is highly regulated or banned in most states, Bijan Tehrani, his co-founder Ed Craven, and their companies created Stake.us: a mirror image of Stake.com that was marketed to U.S. customers as a ‘social casino’ that does not permit ‘real money gambling.’ Stake.us thus presents itself as a ‘safe and free gaming experience.’ This was and is a ruse. Stake.us has deceptively portrayed itself to regulators and consumers as offering harmless gameplay when, in fact, it was and is an illegal online casino.”
Stake.us is indeed one of the most popular sweepstakes casinos in the US, and is therefore often the target of lawsuits. There’s nothing particularly unique about the way Stake.us runs its sweeps casino; many other competitors work with the same dual-currency model, allowing them to function via sweepstakes frameworks rather than traditional gambling laws.
What perhaps sets Stake.us apart somewhat is the way it has a real-money equivalent platform that successfully operates outside the US, plus an extensive marketing strategy and high value partnerships.
Yes, Stake.us is one arm of the Stake empire, and as alluded to by Feldstein Soto, the Stake.us platform is mostly indistinguishable from Stake.com, which is the real-money online casino that the company operates elsewhere.
In terms of company details, Sweepsteaks Ltd is registered in Cyprus, but it’s tied to Australian business, EasyGo Entertainment Pty Ltd. EasyGo was founded in 2016 by Ed Craven and Bijan Tehrani.
Beyond gaming, Stake has expanded into high-profile sponsorships and media, including deals with Everton Football Club, and ownership of the Kick Sauber Formula 1 team. Stake has also partnered with mega celebrities like Drake who push the brand on social media (Drake’s deal is reportedly one of the largest in online gambling).
EasyGo owns Kick too, a streaming platform positioned as a gambling-friendly alternative to Twitch, and Kick is also named in the suit.
Gaming Providers Implicated in the Stake.us LA Lawsuit
The gaming suppliers named in Feldstein Soto’s filing are a group of studios owned by Evolution AB:
- Big Time Gaming (Bonanza, White Rabbit)
- Red Tiger Gaming Ltd (Gonzo’s Quest Megaways, Piggy Riches Megaways)
- NetEnt (Starburst, Piggy Riches 3: Hog Heaven)
- Nolimit City (Duck Hunters, Mental)
Plus two major independent suppliers:
- Hacksaw Gaming (Le Bandit, Duel at Dawn)
- Pragmatic Play (Sugar Rush 1000, Gates of Olympus)
Evolution and Hacksaw are both listed on the Nasdaq Stockholm Exchange as publicly traded companies, while Pragmatic is privately held. Stake.us utilizes games from many other suppliers that aren’t named here, but the above studios have likely been chosen for their popularity and prominence.
How This Case Is Likely to Unfold
Companies operating in the sweepstakes space are no strangers to lawsuits. Many such cases are swiftly moved to private arbitration due to agreements that players generally sign on registration – that’s not applicable here. Other cases are often dismissed due to lack of personal jurisdiction, which is relevant here.
Essentially, the judge needs to believe that Stake.us and its suppliers have sufficient contacts with California to justify the court exercising authority over them. Without that connection, the case could be dismissed before any of the allegations under the Unfair Competition Law or False Advertising Law are even considered.
We’ll keep an eye on this case and update you with any major developments.
Author: Joseph Allen
Updated:
