Apple, Google, and four sweepstake operators face a class-action lawsuit in New Jersey. I’ll examine that and other exciting news items relevant to players, bettors, and industry professionals.
TLDR: a Bite-sized Overview:
- Apple and Google are defendants in a sweepstakes class-action lawsuit for the first time. A plaintiff in New Jersey has issued a class-action lawsuit for himself and the rest of New Jersey, claiming that the tech giants are facilitating illegal gambling and that the sweepstakes operators offer real-money online casino gaming in all but name.
- Philadelphia DA Larry Krasner dropped all charges against Elon Musk in a sweepstakes lawsuit. While not directly related to sweepstakes casinos, the lawsuit further underscores the importance of clear promotional guidelines concerning sweepstakes.
- Kalshi became the most downloaded free app in the Apple App Store. After winning a landmark legal battle to offer election betting contracts, Kalshi proved that Americans crave political betting markets.
- ESPN Bet leverages ESPN’s ecosystem through “Account Linking.” This adds value to users and improves cross-selling opportunities, which can help ESPN Bet compete against leading US sports betting sites.
Google and Apple, Along With Four Sweepstakes Operators, Named as Co-Defendants in Lawsuit
A RICO (Racketeer Influenced and Corrupt Organizations Act) class action lawsuit was filed in a New Jersey Federal court against sweepstakes operators High 5 Casino, WOW Vegas, CrownCoins Casino, and McLuck. The lawsuit also includes Apple and Google as codefendants, including Apple Pay and Google Pay.
The plaintiff, Julian Bargo, claims that Apple and Google distribute illegal gambling software through their platforms. He’s seeking injunctive relief and recovery of monies lost to illegal gambling.
Additionally, Mr Bargo claims sweepstake operators' apps and websites constitute unauthorized and unlawful interstate gambling. He alleges that these companies mask themselves as free-to-play social casinos purely for entertainment, while in reality, they are real money online casinos in all but name.
While RICO charges are typically reserved for organized crime, the plaintiff argues that the definition applies to Apple and Google, which are actively profiting from sweepstakes casino activities. The payment processors, Apple Pay and Google Pay, are implicated because these transaction methods are available in the defendants' sweepstakes apps and websites.
Regulators in Michigan and Ohio have already taken action to limit sweepstakes operators' ability to offer services in their respective jurisdictions. Brands mentioned in Mr Bargo’s lawsuit have been served cease and desist letters in Michigan and Ohio and have since exited both states. These preventative measures resulted from similar class-action lawsuits and the ongoing controversy of sweepstakes casinos in the United States.
What’s unique about this lawsuit is the inclusion of Google and Apple as co-defendants. This has never happened before. Meanwhile, Google has relaxed the Play Store policies for social casino game advertisers, removing previous gambling-related restrictions. This new policy goes into effect on December 4, 2024. That decision was probably made before any implications from this lawsuit.
We’ll monitor this legal case to see if we experience a mass exodus of sweepstakes casinos in New Jersey and if Apple and Google put new restrictions on their app stores and payment processing.
Elon Musk Sweepstakes Lawsuit Comes to an End
Philadelphia District Attorney Larry Krasner dropped his charges against Elon Musk. The lawsuit concerned an alleged illegal "voter lottery" in the guise of sweepstakes, in which Musk awarded a $1 million daily prize to swing-state voters who agreed to sign a petition to support the Constitution, specifically the First and Second Amendments. A court judge ruled that Krasner’s team had failed to demonstrate that the sweepstakes giveaways constituted an illegal lottery.
While this case is not directly related to sweepstakes casinos or sportsbooks, it illustrates the importance of ensuring that what is described in sweepstakes promotions accurately reflects how the promotion will run.
Kalshi Became the Most Popular Free App in the Apple App Store
In relation to the US Presidential election, prediction marketplace Kalshi surged to the top of the Apple App Store’s free app downloads. This proved a significant demand for political betting in the United States.
Kalshi operated under the regulation of the Commodity Futures Trading Commission (CFTC) and became legal in the US after a controversial ruling in October.
Polymarket, a decentralized prediction marketplace based on blockchain technology and focused on cryptocurrency, was second on the chart behind Kalshi. Contrary to Kalshi, Polymarket was forced to settle an enforcement action with the CFTC in 2022 and paid a $1.4 million penalty in addition to agreeing to block US users. They subsequently relocated outside of the US.
They are now under investigation by the Department of Justice (DOJ) under suspicion of accepting US players. However, the DOJ would be dealing with foreign jurisdictions. These cases are typically challenging to enforce since offshore operators are legally allowed to offer services online based on their jurisdiction, where anyone with internet access, including US citizens, can register and bet.
Given the controversy of political betting during this election, regulations around election betting could ease up since nothing stops Americans from registering with offshore alternatives and betting on politics from there, effectively funneling revenue and tax out of the country.
ESPN Connect More Dots in Their Ecosystem
Account linking between ESPN and ESPN Bet became available in November, creating greater compatibility within ESPN’s ecosystem. Users can now track upcoming, live, and settled bets within ESPN Bet, ESPN app, and ESPN.com. This creates a more holistic user experience, which adds more value for sports fans and bettors and opens up cross-selling opportunities with less friction around onboarding.
After Penn Entertainment’s sportsbook was rebranded to ESPN Bet, many anticipated they could challenge FanDuel and DraftKings for the top position over the most popular sportsbooks in the US. To manage that, ESPN must utilize its media and data products outside the sportsbook.