The popularity of sweepstakes across the United States recently resulted in legal hurdles for operators offering such services. In Maryland, one operator recently received a cease-and-desist order, while lawmakers in Mississippi are anticipating banning sweepstakes altogether.

Although sweepstakes casinos operate in a legal gray market, their future is uncertain amid growing concerns, regulatory scrutiny and legal action. In one such case, a popular online casino and sweepstakes operator is in hot water over the offering of “illegal gambling” in California.

Sweepstakes Operators Compared to Internet Sweepstakes Gambling Cafés

That’s the case with Stake.com, the famous betting and gaming company. Word about the new lawsuit filed against the company broke out from Daniel Wallach, a trusted gaming and sports betting lawyer, as well as an expert with solid knowledge. On Wednesday, Wallach uncovered details regarding a new lawsuit filed in Orange County, California, which names Stake as the defendant.

The legal claim alleges the sweepstakes casino website is offering its services to customers in California while violating the state’s gambling laws. Notably, the plaintiff’s legal action aims to force Stake to discontinue its “illegal gambling website” in the aforementioned state.

The plaintiff’s claim compares the popular gambling operator to the “internet sweepstakes gambling cafés of the early 2000’s.” Those internet sweepstakes gambling cafés used to offer customers the chance to purchase a product or internet time and subsequently received sweepstakes points for the money they spent.

Then, consumers had the opportunity to engage in casino-style gambling games, including slots, that awarded cash prizes, the lawsuit describes. “In both cases, the Defendants are offshore organizations (one based in Cyprus; the other, Gibraltar), who have scaled up, on a massive scale, an illegal gimmick that criminals once tried to use to evade state gambling laws,” reads the legal claim against Stake.com

Massive Amounts of Money Are Spent via Sweepstakes, the Lawsuit Claims

Further allegations listed in the lawsuit describe the “play-through requirement” that allegedly applies to Stake customers. Per the legal claim, consumers are required to play-through welcome bonus or promotional giveaways three times, or 300%.

This isn’t uncommon for online gambling operators that offer different incentives and promotions. However, the court documents claim that the aforementioned practice “ensures a lucky player who wins a few wagers with promotional Stake Cash cannot simply cash out.” As a result, the odds are allegedly stacked in the defendant’s favor.

Another important aspect of the lawsuit focused on the money spent by customers in California via Stake. The lawsuit compared the current case to a competitor website that offered its services in Washington and was ordered to pay nearly $25 million to settle an illegal gambling case. “Make no mistake, a massive amount of money is generated at Defendants’ gambling institutions, none of which is paid in California state taxes or gambling licenses,” the lawsuit alleges.