Apple And Google Targets In Federal Class Action Suit Tied To Sweepstakes Casinos

The brief glimmer of seemingly good news for the social/sweepstakes casino operators didn’t last long.

Mere days after the plaintiffs in a New Jersey lawsuit dropped their case against four sweeps sites as well as Google and Apple, those plaintiffs (along with one additional party) launched a federal class action suit along the same lines against the same tech giants.

Notably, however, none of the sweepstakes operators were named as defendants this time. So … a fraction of that glimmer of good news remains?

The new suit, filed Friday in United States District Court in New Jersey, pits plaintiffs Julian Bargo of New Jersey and Lamar Prater of New York (both involved in the previous suit) as well as Rebecca Platt of New York against Apple Inc., Apple Payments Inc., Google LLC, and Google Payment Corp. It seeks “to recover money lost to illegal gambling, for injunctive relief, and for other appropriate relief, from an illegal interstate gambling enterprise facilitated by the Defendants and in which they materially participate.”

In short, the lawsuit asserts that sweepstakes casinos are illegal — a matter of much debate, though they have not been explicitly regulated and declared legal in the U.S. — and that Apple and Google are liable for making the apps available on their phones and for processing payments to and from the casino apps.

Meet the new suit, similar to the old suit

The federal class action suit filed under the Racketeer Influenced and Corrupt Organizations (RICO) Act strongly resembles the recently withdrawn suit, other than High 5 Casino, McLuck, Wow Vegas, and CrownCoins Casino each being named as defendants the first time around whereas various operators are mentioned but not sued in the new complaint.

The complaint accuses the defendants of misconduct by distributing the sweepstakes casino apps, taking a percentage of purchases made on the apps, acting as payment processors, and marketing to users with advertising designed to find “vulnerable” potential customers.

That last one is particularly noteworthy in light of the recent examination of regulated sports betting on HBO’s Last Week Tonight with John Oliver that highlighted how VIP hosts allegedly seek business from problem gamblers. The newly re-filed RICO suit claims, “The Defendants facilitate the Sweepstakes Casinos’ predatory conduct by helping them target the consumers most likely to fall prey to their illicit scheme. The Defendants provide marketing guidance, promotional tools, and more to drive consumers to download the Sweepstakes Casinos’ apps and make in-app purchases.”

Further, the suit alleges that there is a small percentage of players who generate the vast majority of the spending, and Google and Apple monitor data to identify and target those customers.

The complaint goes on to describe the sweepstakes casino apps as “misleading and pernicious software applications.”

It also spells out that the full plaintiff class has suffered losses totaling “hundreds of millions of dollars.”

Currently, there are bills to ban online sweepstakes gaming operations in Connecticut, Florida, Maryland, Mississippi, Nevada, New Jersey, and New York. Operators have also been sent cease-and-desist letters in numerous states, including West Virginia, Maryland, and Michigan.

The Social and Promotional Games Association (SPGA), representing the platform operators and referenced above, has pushed back on the legislation in each jurisdiction. The group said of the active legislation in New York: “This legislation recklessly mischaracterizes sweepstakes gaming and threatens legitimate businesses with unnecessary and harmful regulation. New York lawmakers are dangerously conflating legal promotional sweepstakes with gambling, creating a broad and misguided precedent that could devastate industries far beyond social gaming.”

Nevertheless, the bill sponsored by Joseph Addabbo Jr. has advanced out of the New York Senate sailed through senate committees, and is on to the a third reading on the chamber’s floor.