Stake.US Dodges California Court Battle as Judge Orders Arbitration in Lawsuit

A Legal Sidestep

Stake.us, a sweepstakes casino platform, scored a major procedural win in California when a federal judge refused to rule on its legality and instead ordered plaintiff Dennis Boyle’s lawsuit to arbitration.

Boyle, who claimed Stake.us’s operations were illegal gambling, must now face Sweepsteaks Ltd., Stake’s parent company, in a private arbitration overseen by the American Arbitration Association.

“The court can only conclude that there is no procedural unconscionability as Boyle has failed to meet his burden,” the judge ruled.

Boyle’s suit challenged Stake.us’s model, where users play free games with virtual currency for a chance at prizes, alleging it violates California gambling laws. Sweepsteaks moved to compel arbitration, citing a clause in Stake’s terms of service, which Boyle accepted when creating his account.

The judge found the clause “clearly and unmistakably” delegates arbitrability to the arbitrator, not the court. Boyle argued the clause was unconscionable, but the court noted a 30-day opt-out option he ignored, rejecting claims of coercion or surprise. The case is now stayed pending arbitration’s outcome.

Sweepstakes Industry Cheers

The Social and Promotional Games Association (SPGA), representing sweepstakes platforms, hailed the ruling as a victory. “This ruling affirms what we’ve long said: Social sweepstakes sites are not gambling,” an SPGA spokesperson said, emphasizing their free-to-play model, per provided data.

“They are free-to-play games enjoyed responsibly by millions of American adults, and no purchase is ever necessary to play or have a chance to win prizes,” they added.

With Stake.us facing similar lawsuits in Alabama and Illinois, per covers.com, the decision could set a precedent, shielding platforms from courtroom battles.