Kentucky is seeing a wave of intense action against the controversial sweepstakes sector as 11 class action lawsuits go live. The sweeping legal action targets many of the leading sweeps brands, arguing that their products are illegal in the state.
Kentucky Class Action Lawsuits Target Sweepstakes Operators
Earlier today, prominent gambling lawyer Daniel Wallach announced that 11 class action lawsuits were filed in the state of Kentucky. According to him, the legal action targets major brands, such as Chumba Casino, Luckyland Slots, Modo, and ARB Gaming.
The class action lawsuits assert that the operators violate Kentucky law by offering a dual-currency gaming system that constitutes illegal gambling.
This is not the first time the sweepstakes sector has been under fire in recent years, although the ongoing conflict between regulators and the emerging prediction markets sector has largely taken the spotlight.
Regulated gaming operators and gaming regulators in multiple states have long considered sweepstakes to constitute unregulated gambling. For reference, sweepstakes companies allow players to wager digital tokens, rather than real money, which means that they are not considered gambling. However, players can also buy tokens with real money, putting sweepstakes in a somewhat gray area concerning the legality of their products.
Wallach noted that one of the defendants named in the current lawsuits, ARB Gaming, is said to be headquartered in Florida, despite the fact that Florida explicitly prohibits unregulated sweepstakes. While several states tried to pass similar laws, many of these legal projects did not come to fruition.
Florida’s law was updated in 2013, adding a section specifically targeting sweepstakes operations. The Florida Department of Agriculture and Consumer Services has furthermore previously stated that “perpetual sweepstakes” that use a casino-themed business model are “fundamentally incompatible” with the local law.
Kentucky Also Fired Shots Against VGW, Kalshi, and Polymarket
In other news, Kentucky’s AG previously doubled down on the state’s crackdown on unlicensed gambling by filing lawsuits against online sweepstakes casino operator VGW and prediction market platforms Kalshi and Polymarket.
The recent action highlights Kentucky’s continued effort to prevent gaming businesses that do not possess local licenses from offering their products in the country.
The prediction markets matter, however, presents a variety of other challenges, as the CFTC has continued to zealously insist on its right to regulate prediction markets at a federal level. The agency has previously filed lawsuits against multiple state regulators trying to rein in the prediction markets sector.