Sweepstakes casino operator High 5 Entertainment has lost a legal motion in California after a San Francisco Superior Court judge denied its attempt to compel arbitration. The ruling stems from a lawsuit filed by plaintiff Thomas Portugal, who alleges that High 5's gaming platform misled him into spending money under deceptive practices.
Key Takeaways
- A California judge denied High 5 Entertainment's motion to compel arbitration, keeping a consumer lawsuit active.
- The case adds to prior High 5 settlements, including a $1.5 million agreement in Connecticut.
- Legal experts note that sweepstakes casino lawsuits could establish industry-wide precedents.
In its defense, High 5 moved to get the dispute into arbitration, but the court denied its motion, ruling that the arbitration provision was unconscionable.
The order commented upon a "high degree of substantive unconscionability."
It actually referred to contract provisions that set out a one-year limitation period for all claims without regard to the law. The court also refused to dismiss for want of personal jurisdiction and let the suit move forward in California.
The ruling comes after a previous decision in August, in which Judge Van Aken ruled that Portugal's allegation of financial loss from a supposedly illegal service was enough for legal standing.
High 5 has also faced legal challenges before. In early 2024, it agreed to a $1.5 million settlement in Connecticut, with $643,000 to be paid to aggrieved customers and $800,000 to the Department of Consumer Protection.
Even though its license was stripped at that time, it was subsequently reinstated, signaling the habitual challenges of sweepstakes casino operators across the country.
Los Angeles targets Stake.us in civil enforcement
The challenges facing sweepstakes casinos extend beyond private lawsuits, as government officials begin targeting major operators. The Los Angeles City Attorney's Office has filed a civil enforcement lawsuit against Stake.us, its affiliated streaming service Kick, company co-founders Ed Craven and Bijan Tehrani, and more than a dozen gaming suppliers.
The complaint alleges that Stake.us is an illegal gambling enterprise violating the state's Unfair Competition Law and False Advertising Law. The City Attorney is seeking a permanent injunction to halt Stake's operations in California, restitution of player losses, and civil penalties of up to $2,500 per violation.
For cases involving seniors or disabled individuals, penalties could rise to $7,500 per instance, exposing Stake to potentially massive financial liability.
This marks the first government-led civil enforcement action against a sweepstakes casino in the US.
City Attorney Hydee Feldstein Soto, joined by litigation firm Susman Godfrey LLP, has framed the case as a critical test for California's regulatory approach. The complaint argues that Stake.us is a mirror of Stake.com, the company's global casino and sportsbook blocked in most US jurisdictions, and that its dual-currency system disguises real-money gambling.
Suppliers such as Pragmatic Play, Evolution, NetEnt, Red Tiger, Big Time Gaming, and Hacksaw Gaming are also named as defendants.
