VGW Holdings – the Australia-based company behind Chumba Casino, LuckyLand Slots, and Global Poker – recently won a jurisdictional battle in an ongoing lawsuit. The court case was filed in Florida but will now move to Delaware, as per the judge’s ruling in VGW’s favor.
Plaintiff, Eric A. Knapp is suing VGW and payment processors, Fidelity National Information Services and Worldpay Inc. As part of the case, Knapp alleges that VGW violates Florida’s gambling laws by offering players a chance to win real money prizes at online sweepstakes casinos.
However, before the case gained momentum, VGW successfully argued that it should be transferred to the District of Delaware, citing forum selection clauses in its terms and conditions. These are the same T&Cs which Knapp and other members of the class action agreed to on signup with VGW.
Judge Carlos Mendoza for the Middle District of Florida ruled in VGW’s favor, despite Knapp arguing that “the defendants fraudulently induced [the] plaintiff into agreeing to the terms”. Judge Mendoza responded, “There is no indication that the forum selection and choice of law clauses were formed by fraud.”
This case doesn’t start over – it now moves to Delaware, a state known for its corporate-friendly laws and legal precedents that tend to favor businesses.
Payment processor, Worldpay Inc. was dismissed from the same case after the judge observed it folded into Worldpay LLC in 2020. However, Worldpay LLC, along with Fidelity National Information Services, another VGW payment partner, will still have to defend themselves if the plaintiff chooses to proceed.
Multiple Ongoing Legal Woes for VGW
This is far from the only battle VGW is fighting. It’s also named in a RICO class action case filed in Manhattan Federal Court involving Google and Apple. That’s on top of another lawsuit in Connecticut, plus many more.
It’s worth noting that VGW has benefitted from other court decisions over location recently. In Fair Gaming Advocates Georgia Inc. vs VGW Holdings Limited, the Georgia judge found that while VGW’s platforms were accessible in Georgia, this alone was not sufficient to confer jurisdiction over VGW in this case.
Such dismissals or arguments are becoming a theme in private cases brought against sweepstakes casinos. Arbitration clauses and jurisdictional defenses make it easy for sweepstakes operators to sidestep or prolong cases. Accordingly, no concrete, landmark judgment has yet been made on the sweepstakes casino model in the US.
State-level Lawmakers Join The Conversation
Commentators argue that the real test of the legality of the format will likely come from state gaming regulators and lawmakers. And steam is certainly building in those quarters – in Florida two bills explicitely targeting sweepstakes casinos were introduced short after the above case was moved.
Likewise, Maryland’s Senate and House filed an anti-sweepstakes casino bill in January, with a similar bill in Mississippi starting its passage through the legislature.
If these bills gain traction, they could set a precedent for other states to follow, potentially reshaping the legal landscape for sweepstakes casinos in the U.S. For now, VGW and other operators may have won some legal battles, but the larger regulatory fight is just beginning.
Author: Alex Windsor
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