The Office of the Los Angeles City Attorney has brought a civil suit against Stake.us and a number of game providers for serving players in California.
The civil suit alleges that Stake.us operates an illegal gambling business in California under the guise of a free sweepstakes business, and accuses game providers such as Evolution, Pragmatic Play and Hacksaw Gaming of aiding and abetting the illegal operation.
All of the defendants are accused of violating California’s Unfair Competition Law (UCL), with Stake.us also accused of violating the state’s False Advertising Law.
The UCL broadly prohibits unfair competition, which encompasses “any unlawful, unfair or fraudulent business act or practice”, and allows any city attorney of a city with a population in excess of 750,000 to prosecute violations of the UCL in the name of the people.
The suit claims that Stake.us is curated to create and capitalize on compulsive, addictive, and destructive behaviours, thereby directing money that would otherwise be used to pay for rents, mortgages, utilities, food, clothing, school supplies, college tuition, and medical care to the Stake illegal gambling scheme.
Stake.us is accused of serving players in California since December 2022, offering players the opportunity to participate in online casino games using Gold Coins and Stake Cash.
To play the games, players purchase Gold Coins bundles, which include Gold Coins and free Stake Cash. Gold Coins have no monetary value, while Stake Cash can be redeemed for cryptocurrency or digital gift cards.
“Players then wager both types of coins in the hopes of winning more coins, which can be used either for additional bets or cashed out for real money in a one-to-one exchange,” states the suit. “That Stake.us claims the SC are ‘free’ does not make them valueless, and that the GC cannot be redeemed for cash does not make them valueless, either. Gambling with either is still gambling.”
The suit notes that the terms and conditions of the Stake.us website state that no purchase is necessary to participate in online casino games, but alleges that free Stake Cash is illusory because players must pay postage to claim free credits.
“Stake.us is not a social casino because it does not offer only free, just for fun games of chance. Instead, Stake.us provides players with the opportunity to exchange their real money for virtual casino chips, gamble those chips, and then convert the winnings back into cash. It looks like gambling, sounds like gambling, and feels like gambling because it is gambling”, claims the Los Angeles City Attorney.
Offences under the UCL are punishable by a civil penalty of up to $2,500 per violation, which can be tripled when involving senior citizens, disabled persons, or veterans. FAL violations are subject to a civil penalty of $2,500 per violation.
In a statement to Gaming Intelligence, a spokesperson for Stake said: “We have not been served at this time. However, we reject allegations that have been made in the media in relation to this potential claim and will vigorously defend this and all such claims.”