A class-action lawsuit has been filed against digital sweepstakes casino operator Virtual Gaming Worlds (VGW) and the providers who allow its apps on their platforms, Apple and Google, for alleged illegal gambling.
Illegal Gambling Alleged
VGW claims to run a virtual social casino under the popular titles, Chumba and Luckyland, that does not violate gambling laws and is well within the legal purview of operating. However, the same attorney who filed a class action lawsuit against Apple, Google, and four sweepstakes casino companies operating in the Garden State, including High 5 Casino, Wow Vegas, Crowncoins Casino, and McLuck.com, has recently filed against the two tech giants and VGW in New York.
“Playing games of chance on VGW’s websites, or by downloading VGW’s apps to a personal electronic device like a cell phone or tablet, satisfies New York’s statutory definition of ‘gambling’ and renders the device a ‘gambling device’ as those terms are defined at N.Y. Penal Law §§ 225.00(2) and (7), respectively,” according to the lawsuit.
Allegations of Misleading Practices
The suit goes on to say the following: “The VGW Defendants have succeeded in misleading regulators about the true nature of their operations for far too long. These Defendants are not licensed casinos. They are not regulated by any casino regulator as a traditional, licensed casino would be.
“No one is looking over anyone’s shoulder to ensure that the digital dice aren’t loaded. And the VGW Defendants have, thus far, managed to entirely insulate themselves from civil liability by hiding behind an iron curtain of bizarre arbitration agreements, many of which require arbitration in far-flung locales like Malta and elsewhere.”
The most recent lawsuit against VGW and other sweepstakes operators is not new, and other industry stakeholders like the American Gaming Association and the California gaming tribal nations have also voiced their objections to the virtual sweepstakes industry, claiming it violates state gambling laws and cannibalizes a portion of the business that should be going to licensed iGaming and mobile sports betting operators.
Industry’s Rebuttal
With the mounting lawsuits targeted at online sweepstakes companies, a coalition was formed in September called the Social and Promotional Gaming Association. Its press release declares that the group, of which VGW is conspicuously absent, is “an organization dedicated to providing stakeholder education and advocating for the responsible operation of social and promotional games, sometimes referred to as social sweepstakes games.”
Advocating for Industry Transparency
“The formation of the SPGA is a critical step toward establishing a clear and cohesive voice for the social sweepstakes industry,” said Seth Schorr, CEO at FSG Digital Inc. “By creating this association, we are committed to helping regulators and policymakers understand how our industry’s products work and how they comply with the appropriate state and federal laws.”
Despite the protestations to the contrary, Michigan regulators sent a cease-and-desist letter to PredictionStrike, Stake.us, and VGW to stop offering their virtual sweepstakes products to residents within the Wolverine State.
It should also be noted that VGW settled a class action lawsuit in Kentucky under its Chumba Casino brand for $11.75 million. VGW denied any wrongdoing but settled the matter to prevent further litigation.
