Lawsuit Claims Stake.us Operates Illegal Gambling Platform in California

California. The complaint, filed by Dennis Boyle, argues that the platform violates state laws by offering casino-style games to California residents.

The legal action is part of a broader movement challenging sweepstakes casinos across the U.S., with multiple operators facing lawsuits at both state and federal levels. While proponents maintain that sweepstakes-based models operate within legal boundaries, these platforms continue to face increasing scrutiny.

Disputed Sweepstakes Model and Legal Allegations

Stake.us operates as the U.S. extension of Stake.com, a cryptocurrency-based gambling giant recognized among the most profitable private online gaming firms worldwide. At the center of the legal challenge is the company’s business model, which uses a dual-currency system involving “Gold Coins” and “Stake Cash.”

The lawsuit claims that players purchasing Gold Coins receive Stake Cash as a bonus, which can be redeemed for various prizes, including gift cards and cryptocurrency. According to Boyle, who identifies as a problem gambler, this structure amounts to real-money wagering and targets California residents. The complaint highlights that Stake.us requires s to disclose their state of residence during registration and has policies specifically catering to California s.

Gaming law expert Daniel Wallach said: “The advantage of suing in California is twofold: the substantive law is perhaps the most plaintiff-friendly in the entire country, and procedurally, there is a vehicle available to plaintiffs that can eliminate or at least shorten many of the delays that are inherent in cases filed outside of California.”

Wallach further explained that California courts have historically ruled that when money spent correlates directly with increased chances of winning in sweepstakes-style games, it meets the legal definition of “consideration,” an essential criterion for defining gambling under state law.

Claims of Non-Random Algorithms and Deceptive Practices

The lawsuit also asserts that Stake.us employs unfair business tactics designed to maximize engagement and spending, including the use of algorithms that allegedly lack true randomness. Furthermore, Boyle’s attorneys argue that Stake.us enforces “play-through requirements,” which encourage continued play before winnings can be withdrawn.

Additionally, the suit claims that Stake.us operates without proper licensing, violating California’s Unfair Competition Law. It seeks to invalidate agreements with the platform and obtain injunctive relief to prevent the company from continuing operations in the state.

One common defense strategy in sweepstakes-related lawsuits is the removal of cases to federal court, where legal hurdles for plaintiffs are typically greater. In this case, the lawsuit was initially filed in Orange County Superior Court but has since been transferred to the federal system. Boyle’s legal team is contesting this move, arguing that the case should remain in the state court system.

Stake.us has opposed this request, asserting that the lawsuit seeks to “intervene in the free market to prevent the people of California from enjoying the social gaming product and services.”

Stake’s Offshore Model and Industry Comparisons

The legal filing also criticizes Stake.com’s offshore business structure, with its entities ed in jurisdictions such as Gibraltar and Cyprus. The plaintiff contends that this setup allows the company to by U.S. regulations while offering online gambling services to American players.

Boyle’s lawsuit draws parallels to internet sweepstakes cafes that gained popularity in the early 2000s. These establishments sold products like internet time, offering sweepstakes entries as a bonus, which could be used to play casino-style games for cash prizes. Similar models were later deemed illegal, and the plaintiff argues that Stake.us operates under the same principles.

The lawsuit also questions the economic implications of Stake.us’s operations in California, highlighting the significant financial transactions occurring on the platform without state taxation or regulatory oversight. The complaint references a comparable case in Washington, where a sweepstakes-based gambling site settled with the state for nearly $25 million over allegations of unlawful gambling.

This case is part of a wider trend of legal challenges targeting sweepstakes casinos. Several state legislatures, including Florida, Maryland, Mississippi, and New York, are actively developing bills aimed at restricting or banning sweepstakes-based gambling operations.

Source:

Stake sued in California for alleged ‘illegal gambling’, lrealmoneyaction.betsandodds.net, March 28, 2025.