Los Angeles City Attorney Sues Stake.us and Kick in First-Ever Government Case Against Sweepstakes Casinos

The case, brought in California Superior Court this week, represents the first government-filed lawsuit in the United States against a sweepstakes casino operator and could set the stage for broader action across the state.

City Attorney Hydee Feldstein Soto, the first woman and Latina to hold the position, announced the sweeping action, alleging that Stake.us and its partners are running an illegal online gambling enterprise in violation of California law. The lawsuit names co-founders Ed Craven and Bijan Tehrani, along with a long list of third-party gaming suppliers that provide content to the platform, including Evolution, NetEnt, Red Tiger, Big Time Gaming, Hacksaw Gaming and others.

Allegations Against Stake.us

The 49-page complaint contends that Stake.us was deliberately designed as a “mirror” of Stake.com, the company’s international casino and sportsbook. While Stake.com is blocked in most U.S. jurisdictions, Stake.us operates in the American market under the guise of being a sweepstakes-based promotional platform.

Like many sweepstakes casinos, Stake.us uses a dual-currency system. Players purchase “Gold Coins,” which ostensibly have no monetary value, but receive “Sweeps Coins” or “Stake Cash” as a promotional bonus. These Sweeps Coins can then be redeemed for cryptocurrency or digital gift cards, effectively turning gameplay into a real-money gambling experience. Prosecutors argue this setup disguises unlawful gambling activity as a sweepstakes promotion.

The lawsuit further accuses Kick Streaming, a live-streaming platform founded by Stake’s owners, of helping to market and promote Stake.us to California residents. Kick has grown rapidly as a competitor to Twitch, fueled in large part by high-profile streamers showcasing casino-style content. The City Attorney’s Office says this marketing strategy is a direct part of the alleged illegal enterprise.

Legal Grounds and Potential Penalties

The City Attorney’s Office is pursuing claims under California’s Unfair Competition Law (UCL) and False Advertising Law (FAL). The lawsuit seeks:

• A permanent injunction to halt Stake.us’s operations in California.
  
  

• Restitution of all funds lost by California residents on the platform.
  
  

• Civil penalties of up to $2,500 per violation of the UCL and FAL.
  
  

• Enhanced penalties of up to $7,500 per violation in cases involving senior citizens or disabled persons.
  
  

Given Stake’s large player base and the scale of its operations, observers say the potential financial exposure could easily reach hundreds of millions—if not billions—of dollars.

Broader Legal Context

Sweepstakes-style casinos have long operated in a regulatory grey area in the U.S. These platforms argue they are legal because they offer players free ways to participate without purchasing currency. However, regulators counter that the structure is indistinguishable from traditional gambling, especially since most players pay to play.

California lawmakers banned physical “sweepstakes cafes” in 2015, following a wave of storefront operations that bundled phone minutes or internet time with slot-style games. Courts across the country ultimately ruled these schemes constituted illegal gambling. Regulators now see online sweepstakes casinos as a digital revival of the same model.

In the California legislature, Assembly Bill 831 is currently under debate. The bill would explicitly ban online sweepstakes casinos by extending the 2015 prohibition to digital platforms. Industry leaders, including Virtual Gaming World (VGW)—operator of Chumba Casino and Luckyland Slots—and the Social Gaming Leadership Alliance, strongly oppose the measure. They argue that their platforms comply with consumer protection standards and provide legitimate free-play options. Regulators, however, remain unconvinced, pointing to the high rates of player spending and cash-out options that make the model functionally identical to gambling.

Partnership with Susman Godfrey LLP

Notably, Feldstein Soto’s office is partnering with Susman Godfrey LLP, a litigation powerhouse that recently filed a nationwide class action against VGW. The firm’s involvement signals that California officials may be coordinating a larger legal strategy to curb the sweepstakes industry.

Because California law generally prevents private individuals from suing to recover gambling losses, only government officials can bring enforcement actions on behalf of the public. This lawsuit, therefore, could serve as a roadmap for other city or county attorneys across California to take similar action.

Industry Implications

The lawsuit marks the most significant legal challenge yet for the rapidly growing sweepstakes casino industry. Stake.us, with its global brand recognition, high-profile sponsorships, and partnership with Kick, has been one of the fastest-rising players in the market. If successful, the enforcement action could force the company to exit California and potentially embolden other states to pursue similar lawsuits.

For suppliers such as Evolution, NetEnt, and Hacksaw Gaming—named as defendants in the complaint—the case also raises new questions. Traditionally, content suppliers have avoided direct legal exposure, but prosecutors now allege that their role in powering Stake.us’s platform makes them complicit in the illegal gambling scheme.

The Road Ahead

Whether this lawsuit becomes the beginning of a coordinated statewide crackdown remains to be seen. But regulators and legal experts suggest that Los Angeles’s move could signal a turning point in how sweepstakes casinos are treated under U.S. law.

For players in California, the case represents a potential path to restitution for losses incurred on Stake.us. For the industry at large, it underscores a growing recognition by government officials that the sweepstakes model is not fundamentally different from online gambling.

As Feldstein Soto emphasized in her announcement, the case is about protecting Californians—especially vulnerable groups like seniors and the disabled—from predatory online gaming practices. But given the billions of dollars at stake and the national prominence of Stake and Kick, the lawsuit may resonate far beyond California’s borders.