Australian gaming empire Stake sued in US over California online casino
The Stake gaming empire founded by Australian rich-lister Ed Craven and Bijan Tehrani is facing a US lawsuit that alleges one of its online ‘social casinos’ is operating illegally in California.
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Australian rich-lister Ed Craven and Bijan Tehrani’s global Stake gaming empire is facing a US lawsuit that alleges one of their online “social casinos” is operating illegally in California.
US man Dennis Doyle, who in court filings says he is a gambling addict, claimed a subsidiary of Mr Craven and Mr Tehrani’s gambling outfit, Stake.Us, is profiting off vulnerable players who can “never actually win money” because the site operates outside regular gambling rules requiring casinos to randomise their results.
He wants the site shut down in California, is seeking $US75,000 and claims the defendant – Sweepsteaks Limited – is an “offshore criminal enterprise that owns and operates the website”.
“In California, it is illegal to operate and offer online gambling casinos, including websites that offer slot machines, blackjack, roulette, and poker,” court filings read.
“In this regard, California has a fundamental and deep-rooted public policy against gambling.
“The slots, blackjack, and other games of chance offered on the website (Stake.Us) are gambling, and they are no different than if they were played in a Las Vegas casino.”
Stake.Us does not have a licence to operate in California, which has one of the toughest sanctions for conducting business without necessary registration or licencing, Mr Doyle’s filings allege.
A spokeswoman for the Australian arm of Stake, Stake.com said the claim is “baseless”.
“We reject all of the allegations and are confident the claim will not succeed,” she said.
It’s understood courts in California have dismissed similar matters, finding promotional sweepstakes games don’t constitute unlawful gambling under state law.
Mr Craven, the 29-year-old who is worth $4.53bn according to The Australian’s latest Richest 250 list, previously told this masthead he and the business are working with governments and regulators who are catching up with companies like Stake.
“Where Stake did things a little bit differently [was] realising that the whole world was open for business in a pre-regulated framework. And these markets were potentially incredibly lucrative,” he said.
“And now governments and regulators are starting to say ‘hold on a second, we need to be involved here’. And we are incredibly cooperative with that and have been fortunate to be involved in these discussions.”
Stake has secured licences in Brazil, Italy, Peru and Colombia. It is waiting for approval of a licence in Denmark and Canada’s Ontario province.
Rumours have previously been reported that Stake want a licence in Australia, after Mr Craven met with regulators in Darwin in February.
Mr Craven and Mr Tehrani launched Stake in 2017 as an online casino using cryptocurrency.
According to Mr Doyle’s court filings, first lodged in February, he “struggles with a gambling addiction, and he lost money on Defendant’s illegal gambling website within the last three years”.
The company being sued, Sweepsteaks Limited, operates Stake.Us but is registered in Cyprus. It also has an office in Dallas, Texas.
Mr Doyle alleged Stake.Us chose not to use a technology that prevents users from using their websites if they are located in a state where online gambling is illegal, such as California.
Mr Doyle said that is “because that would prevent Defendant from profiting from gambling in California”.
The site claims there is no purchase necessary to enter its promotional play sweepstakes and “Stake Cash” – which can be redeemed for prizes and cryptocurrency if it is won – cannot be purchased directly, according to Mr Doyle’s lawsuit.
“However, Defendant uses the Stake Cash system to entice players to purchase additional Gold Coins and to continue gambling on the games,” the filings said.
“Much like how a brick-and-mortar casino tempts players to stay at a blackjack table with free drinks, or how online sportsbooks provide promotional ‘free wagers’ for sports bets in jurisdictions where sports gambling is legal, Stake Cash is an advertising and customer retention strategy.”
Originally published as Australian gaming empire Stake sued in US over California online casino
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