Evolution and Pragmatic Play have withdrawn their content from online sweepstakes provider Stake.us for users in California, amid the possibility of a ban on online gaming.
State legislators are presently discussing California’s Assembly Bill 831 (AB 831) which, if passed by the Senate, would effectively ban all online casino and sweepstakes offerings.
That has put global crypto casino Stake right in the line of fire.
Civil Enforcement Action Against Stake.us
In a significant development last week, the City of Los Angeles filed a civil enforcement action against Stake’s US sweepstakes casino subsidiary and more than 20 of its providers.
Stake.us has operated under the banner of being a ‘social casino’ where users receive virtual currency, Stake Cash, and redeem rewards using sweepstake mechanics, but legislators argue that it is providing a gambling service and avoiding regulatory control.
Stake.us offers more than 1,900 casino games with a line-up that includes slots, live dealer games, table games and scratch cards.
Within the action, LA’s lawyers stated: “By masking its real money gambling platform as “America’s Social Casino”, Stake.us and Defendants create a predatory, dangerous gambling environment.
“This deliberately misleading environment draws in Californians across demographics, exposes them to substantial risks of gambling addiction, jeopardizes their and their families’ financial and mental health, and otherwise presents the type of hazards that California’s anti-gambling laws are intended to prevent.”
Evolution is a leading supplier of live online casino and slots content and was one of those firms named in the lawsuit, along with its studios Nolimit City, Red Tiger, Big Time Gaming, and NetEnt.
Pragmatic Play provide casino and slots content as well as sports betting options, while slots provider Hacksaw Gaming was also named in the action.
All three have acted swiftly to disassociate themselves from Stake.us and withdraw their products while the legitimacy of online sweepstakes casinos is under scrutiny.
A Pragmatic Play spokesperson told NEXT.io: “Pragmatic Play has chosen to discontinue licensing its games to sweepstake operators in US States where restrictions were not already in place, in light of regulatory developments and evolving legislation.
“We remain committed to the highest standards of compliance and will continue to engage transparently with regulators.”
Arguing Against An Online Gaming Ban
Not everybody is backing away from the fight against the potential legislation.
Publishers Clearing House, a direct-marketing company that operates several sweepstake and prize-based websites, sent a letter to the California Senate Appropriations Committee to put on record its “strong opposition” to AB 831.
It effectively called for updated legislation rather than total exclusion, and quoted industry projections that up to $149 million in annual sales tax revenue could be generated through a regulated social gaming and sweepstakes sector.
“Sweepstakes promotions are lawful marketing mechanisms that encourage optional in-game purchases of virtual tokens to enhance gameplay on online platforms,” the company wrote.
“These tokens have no cash value, cannot be redeemed, transferred or traded, clearly distinguishing the social gaming model from real-money gambling.
“Online social gaming is an entertainment alternative that allows people to play online social casino-style games in a fun, low-pressure setting without the risk of losing money.
“Players can always play for free with ongoing access to free gold coins and robust alternative methods of entry, ensuring no purchase is ever required.
“Contrary to claims that this industry is unregulated or operates in the shadows, PCH operates transparently under established consumer protection laws, not gaming law.
“We urge the California Legislature to pause this rushed legislation, extend it to a two-year timeline and engage with stakeholders to develop a thoughtful regulatory framework.”
The majority of California’s federally regulated tribes support AB 831 and it is co-sponsored by the Yuhaaviatam of San Manuel Nation and the California Nations Indian Gaming Association.
Not all are in favour though as three smaller tribes, the Sherwood Valley Band of Pomo Indians, Big Lagoon Rancheria and the Kletsel Dehe Wintun Nation of the Cortina Rancheria, have voiced their opposition.
