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Sweepstakes gaming operators continue to face a steady stream of civil lawsuits challenging their business model in various ways and seeking damages, with suppliers increasingly getting caught in the crossfire.
Over the past year, more than a dozen lawsuits have been filed against sweepstakes-based casino and sports prediction platforms in state and federal courts across the United States. Defendants include the operators themselves and vendors doing business with them.
Opponents of sweepstakes casino gaming have publicly lobbied vendors, including payment processors, to reconsider working with sweepstakes operations, and in a lawsuit filed in a federal court in Florida, opponents went a step further by naming Worldpay, and parent company Fidelity National Information Services (FIS), as a co-defendant.
“FIS has admitted and advertised to the public that it is a payment processing partner for VGW and that it has been actively working in coordination with VGW to collect and distribute money to VGW from Florida citizens who have gambled on VGW’s internet casino websites,” wrote Dennis Wells, an attorney for plaintiff Eric Knapp in the class-action lawsuit.
“In addition, FIS distributed gambling winnings to Florida citizens on behalf of VGW.”
The suit seeks to recover losses from Knapp and other players, claiming that VGW’s operation is an illegal gambling operation and Florida state law permits recovery of ill-gotten gambling revenues from operators.
In a response seeking to dismiss the case, or move it to a Delaware court, VGW attorneys said that the lawsuit is the tenth filed against VGW in roughly a year.
“In each case, the plaintiff has speciously claimed that VGW Group’s online casino-themed social games are unlawful ‘gambling’, and that the plaintiff is entitled to recover all money spent by all players of the games in a particular state,” VGW attorneys wrote.
“Some cases have been brought by companies that were formed for the purpose of bringing the lawsuits; others have been brought by players (some anonymously) as putative class actions, in violation of the arbitration agreements and class action waivers in VGW Group’s terms of service,” they continued. “None have succeeded thus far.”
“[FIS and Worldpay] have nothing to do with the operation of these gaming websites,” wrote attorney Ian Ross on behalf of FIS in a separate filing. “Instead, Plaintiff is suing them based solely on their alleged secondary liability for his alleged losses, claiming that they were the payment processors who processed the transactions for the website games he played.”
Arbitration agreements have so far played a central role for VGW and other sweepstakes operators in similar lawsuits in hopes of early dismissal of the cases.
The second paragraph of the terms and conditions for Chumba Casino, one of VGW’s most popular brands, lays out the company’s position in all caps for emphasis. Specifically, players are required to accept the terms of service in order to use the platform.
“Please note that these terms and conditions include a provision waiving the right to pursue any class, group or representative claim and requiring you to pursue past, pending, and future disputes between you and us through individual arbitration unless you opt out within the specified time frame,” the capitalized terms read.
The terms include a provision allowing players to opt out of the agreement to arbitrate, but do not permit opting out of a class-action waiver.
VGW has used similar arguments in a case in Georgia, where the company argues that while the lead plaintiff opted out of arbitration in previous versions of the terms, she later accepted new terms without opting out.
The company did pay $11.75m to settle a 2022 lawsuit in Kentucky, a state where broad loss recovery laws allow third parties to sue to recoup damages on behalf of another person after a set period of time.
This was the same law that, most notably, allowed for a $1.3bn judgement against PokerStars in December 2020 for offering what was deemed to be illegal gambling in the state, and was later settled for $300m by parent company Flutter.
Similar arbitration requirements were at the center of a lawsuit filed in California against sweepstakes sportsbook Fliff. A judge ruled earlier this year that the case should in fact be arbitrated after Fliff included its own arbitration agreement in its terms of service, which was ruled to be enforceable.
The most recent filing against sweepstakes operation came last week with the filing of a federal class action in New Jersey against multiple sweepstakes operators, including High 5 Casino, Wow Vegas, CrownCoins Casino and McLuck seeking loss recovery, as well as damages from Apple and Google, who the suit claims “willingly assist, promote, and profit from this illegal scheme” by offering the apps in their respective app stores and taking a cut of purchases within the apps.
