Florida Launches Lawsuits Against Sweepstakes Casino Operators

A rough stretch for sweepstakes casinos continued this week, as Florida Attorney General James Uthmeier launched two major lawsuits against the sector on Wednesday. 

The state's action against top sweepstakes casino operators alleges that the platforms operate illegal gambling enterprises that violate Chapter 849 of the Florida Statutes and the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). The lawsuits target VGW Holdings (the parent company of Chumba Casino, LuckyLand Slots, and Global Poker) and Stake.

Despite marketing themselves as free-to-play, the state alleges that the dual-currency systems they offer are used to evade state taxation and oversight, effectively allowing the sites to operate as unlicensed, real-money online casinos.

And Uthmeier didn't mince words concerning the lawsuits, stating, “These so-called ‘sweepstakes’ and ‘social casinos’ are illegal online gambling operations. If it looks like a casino, takes real money like a casino, and pays out like a casino, it is a casino - and it is illegal under Florida law. These companies have been preying on Floridians, including minors and seniors, with deceptive marketing, and 24/7 access, while dodging our state’s licensing, taxation, and consumer-protection requirements. They must be stopped.”

The AG's office also targeted multiple sweepstakes casino payment processors. Breeze Labs, Praxis, Trustly, and Worldpay were also named as co-defendants in an effort to dismantle the operators via removing the gatekeepers of customer onboarding, card processing, and prize redemptions. 

A positive outcome for the state may lead other states to target sweepstakes casinos. States are already taking steps toward regulating the industry, with Tennessee and Oklahoma imposing bans. Tennessee lawmakers introduced ban bills HB1885 and SB2136 in January, while Oklahoma introduced SB1589 in February.   

More sweepstakes casinos shut down

Two more online sweepstakes casinos have ceased operations, or are in the process of doing so, as states continue cracking down. Money Factory closed on Aug. 9, while CoinFrenzy announced it would shut down its platform on Sept. 25. 

While it doesn't say why Money Factory decided to close its platform, some speculate the sweepstakes casino may have been short on cash. The operator also mentioned in its statement that it is exploring a potential acquisition of the group’s assets. 

CoinFrenzy confirmed it would shutter operations and has stopped new purchases, but players can redeem existing balances until Sept. 25.

These exits follow news from LuckyLand Slots (owned by Florida co-defendant VGW), which announced it would stop North America operations on Sept. 14.