High 5 Receives Defeat in California Legal Battle
Sweepstakes casino operator High 5 Entertainment has lost a significant legal battle in California after a San Francisco Superior Court judge rejected the company's request to move a consumer lawsuit into arbitration. The case, brought forward by plaintiff Thomas Portugal, alleges that High 5 engaged in deceptive practices that led him to spend money on its online poker platform. The decision ensures that the lawsuit will proceed in court rather than be handled privately through arbitration.
LISTEN TO THIS ARTICLE:High 5 argued that the dispute should be subject to arbitration under the terms of its user agreement. However, the court determined that the company's arbitration provision was unconscionable.
The ruling noted a high degree of substantive unconscionability, specifically pointing to a contractual requirement that imposed a one-year deadline for all claims, regardless of any applicable legal statutes. This provision was found to unfairly restrict consumer rights, rendering the arbitration clause unenforceable.
In addition to rejecting arbitration, the court also dismissed High 5's claim that the lawsuit should be thrown out for lack of personal jurisdiction. This means the case will continue to be litigated in California courts.
The ruling follows an earlier decision in August in which Judge Van Aken determined that Portugal's claims of financial losses tied to what he described as an unlawful gaming platform were sufficient to establish legal standing.
This latest legal setback is not the first time High 5 has faced scrutiny from regulators and courts. In early 2024, the company agreed to a settlement with the state of Connecticut totaling $1.5 million. The settlement required High 5 to pay $643,000 in restitution to players and $800,000 to the state's Department of Consumer Protection.
Although its license in Connecticut was initially revoked, it was later reinstated following the settlement. These repeated challenges reflect the increasingly difficult environment for sweepstakes casino operators, who have been subjected to heightened regulatory and legal pressure across the US.
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California City Targets Sweepstakes Gaming
The growing legal challenges to sweepstakes casinos are not limited to private lawsuits. In California, government officials have also turned their attention to major industry players.
The Los Angeles City Attorney's Office has filed a civil enforcement lawsuit against Stake.us, its streaming platform Kick, company co-founders Ed Craven and Bijan Tehrani and more than a dozen related gaming suppliers. This marks the first civil enforcement action led by a government authority against a sweepstakes casino operator in the US.
The complaint against Stake.us alleges violations of California's Unfair Competition Law and False Advertising Law, asserting that the platform operates as an illegal gambling enterprise. The Attorney's Office is seeking a permanent injunction to shut down Stake's activities in California, restitution for players who lost money, and civil penalties of up to $2,500 per violation.
In cases involving senior citizens or individuals with disabilities, the penalties could increase to $7,500 per violation, exposing Stake to potentially significant financial liability if the case is successful.
The lawsuit frames Stake's operations as a direct test of California's approach to regulating sweepstakes casinos. The complaint argues that Stake.us is functionally equivalent to Stake.com, the company's global gambling platform that is blocked in most US jurisdictions.
It further alleges that Stake's dual-currency system disguises real-money gambling under the sweepstakes model, a practice regulators argue undermines consumer protections and misleads players.
Together, the developments involving High 5 and Stake underscore the intensifying legal focus on sweepstakes casinos in the United States. With courts and regulators challenging contractual provisions, advertising practices, and the very structure of sweepstakes gaming models, operators are facing increased pressure to defend their business practices in jurisdictions across the country.
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