"Sweepstakes Scandal"
Alabama Files Lawsuit Against Stake.us, Accusing Them of Masking Real-Money Gambling Operations Under Sweepstakes Laws
In another legal bend, Stake.us, the cryptocasino's social counterpart, finds itself engulfed in a lawsuit in the U.S. District Court for the Northern District of Alabama. The complainants, led by Laura Hall, have accused Stake.us of running an illegal gambling business, contending that the site is nothing more than a thinly disguised casino.
On Stake.us, the two in-game currencies—Gold Coins and Stake Cash—are on paper, merely play money. However, the lawsuit's main concern lies with the "technically" modifier, questioning the legitimacy of the pseudo online gambling establishment.
Stake.us defends its operations, claimhing it's a social casino and sweepstakes site, where users can buy virtual currencies, but there's no real-money value associated with Gold Coins or Stake Cash. Yet, the lawsuit counters this claim, labeling the sweepstakes claim as an "outdated gimmick once widely used by unscrupulous operators in the early 2000s."
This gimmick has roots in Internet cafes that functioned as fronts for gambling businesses in the past. Back when internet access at home and smartphones were scarce, people frequented internet cafes to use the internet, and pre-paid calling cards were popular. Some of these internet cafes were illegitimate gambling dens, with customers paying for internet time or phone cards that came with credits for gambling machines.
The lawsuit draws parallels between these old Internet cafe tactics and Stake.us, where users buy one thing—Gold Coins or Stake Cash—and receive another—an opportunity to participate in real-money gambling.
Gold Coins vs. Stake Coins Breakdown
At a glance, Stake.us mirrors traditional social casinos. Players receive Gold Coins for registration, daily bonuses, and promotions, all absolutely free. No real-world prizes are on offer. However, the controversy arises when considering the bundles of Gold Coins that players can buy. Acquiring these bundles means entering the Stake Cash territory, the site's premium currency. Players can wager Stake Cash on games and once certain requirements are met, exchange them for cryptocurrency.
While Stake Coins lack real-world value in theory, they can be converted into cryptocurrency, which, in turn, can be exchanged for real currency. In essence, while users don't directly deposit real money onto Stake.us, they can still purchase fake currency, gamble with it, and convert it into real money.
"Stake seeks to separate the element of consideration from chance by offering a two-tiered system of virtual coins, both of which serve as gambling chips, while labeling it all as a sweepstakes," the lawsuit states.
The suit echoes the past Internet cafe operations, both of which rely on a two-tiered system—one type of currency with no real value, and another that can be traded for cash, enabling them to bypass gambling restrictions by claiming they are not gambling operations.
- The lawsuit against Stake.us, a cryptocasino's social counterpart, argues that it runs an illegal gambling business, comparing it to outdated internet cafe tactics where gambling activities were disguised as sweepstakes.
- Stake.us, while maintaining it's a social casino and sweepstakes site, has been labeled by the lawsuit as using an 'outdated gimmick' that was once prevalent among unscrupulous operators in the early 2000s.
- The controversy surrounding Stake.us arises from the bundles of Gold Coins players can buy, which lead to entering the Stake Cash territory, a premium currency that can be converted into cryptocurrency and ultimately, real money.
- The lawsuit suggests that Stake.us tries to separate gambling from consideration by offering a two-tiered system of virtual coins, both of which serve as gambling chips, but labeling it all as a sweepstakes, a strategy reminiscent of illegal internet cafe operations.
