Proposed Class-Action Lawsuit Targets Sweepstakes Casinos in California Online Gambling Sector

An online sweepstakes website operating in California is facing a proposed class-action lawsuit. This lawsuit, spearheaded by plaintiff Dennis Boyle, has been filed in the Orange County Superior Court against Yellow Social Interactive, a Gibraltar-based gaming firm doing business in California as Pulsz.com. The platform advertises itself as a free-to-play social casino, but according to Boyle’s legal team, it is merely an illegal online gambling operation.

Boyle’s legal representatives argue that Pulsz.com should be immediately shut down to protect consumers. In the complaint, it is stated that this action is initiated under California’s Business & Professions Code, which seeks public injunctive relief to halt the operations of the illegal gambling website.

The complaint describes the defendant as an offshore criminal enterprise that owns and operates the mentioned website.

Represented by Smith Krivoshey, a Boston-based firm known for class-action litigation, Boyle’s case mirrors previous successful lawsuits, such as their 2022 class-action settlement against Six Flags, which resulted in a significant settlement of $83.6 million due to wrongful charges during the COVID-19 pandemic.

Sweepstakes Drama

This lawsuit against Yellow Social and Pulsz.com is not unique; it marks the third active legal case involving sweepstakes casinos.

In October, another class-action lawsuit emerged, filed by plaintiff Stephanie Cox in Hartford Superior Court against VGW Holdings, which operates several online platforms such as Chumba Casino, Global Poker, and LuckyLand Slots in Connecticut. These platforms are also marketed as social casinos or sweepstakes.

The legal claims across these lawsuits suggest that these online social casinos are deceptively marketed as gaming platforms. Typically, users sign up for free and receive a limited number of tokens, only to find that they can purchase a secondary currency for actual gameplay. Claimants assert that while providers state that no purchase is necessary to obtain Sweepstakes Coins, this claim is misleading, given that users often exhaust their complimentary tokens and need to buy Gold Coins to continue playing.

Common Issues with Sweepstake Casinos:

• Legal definitions of gambling differ significantly between jurisdictions.
• Marketing tactics often create confusion regarding whether the platforms are purely skill-based or rely on luck.
• Participation often requires financial investment, despite claims of ‘free play.’
• Online gaming regulations are not uniformly enforced, leading to questions about legality.

The predominant way to acquire Sweepstakes Coins is through the purchase of Gold Coins. This means that, effectively, users who buy Gold Coins are also paying for Sweepstakes Coins, which contradicts the claim that purchases are unnecessary.

VGW Holdings is concurrently facing a federal class-action lawsuit in Georgia, alleging that their online services are illegal.

Sweepstakes websites are under increasing scrutiny from established gaming organisations, including the American Gaming Association (AGA), which is urging lawmakers to impose bans on these platforms. Numerous state gaming regulatory agencies have sent cease-and-desist letters to operators they believe to be unlicensed in the gaming sphere.

No Financial Damages in California

While the lawsuits filed in Georgia and Connecticut are seeking financial restitution and court orders to shut down online gambling services, the situation in California is different. Boyle and others joining the class action will not be eligible for financial compensation, as California’s Unfair Competition Law stipulates that public injunctive relief cannot be arbitrated.

This means that, while public injunctions can benefit society by eliminating deceptive practices, they do not provide a financial payoff for the plaintiffs involved.

In summary, legal challenges against online sweepstakes casinos are intensifying as lawmakers and gaming advocates push for more stringent regulations and enforcement. This case could set a precedent that affects how online gaming platforms operate in California and potentially beyond.