Chumba Casino Owner Targeted in Connecticut Class-Action Lawsuit
VGW Holding Ltd, the parent company behind online sweepstakes casinos Chumba Casino and Global Poker, is facing a class-action lawsuit in Connecticut, where residents claim the company engaged in deceptive and illegal practices. This legal action comes only a month after the Connecticut Department of Consumer Protection ordered VGW to cease its operations in the state, citing potential issues related to its business model and regulatory compliance.
A screenshot of the Chumba Casino website's game selection. (Source: Chumba Casino)
LISTEN TO THIS ARTICLE:Connecticut residents allege that VGW defrauded users by creating a misleading environment regarding the legality of its platforms. The suit asserts that the company entices them to participate in what plaintiffs argue amounts to illegal gambling.
Related: VGW Exits Connecticut Amid Regulatory PressureThe lawsuit, filed in Connecticut state court, accuses VGW of promoting its platforms through misleading advertisements that suggest a lawful sweepstakes-based model, despite structuring games in a way that allegedly mirrors traditional gambling. According to the legal filing, VGW invested hundreds of millions of dollars into marketing campaigns for its platforms, which plaintiffs claim were specifically designed to appear compliant with state and federal regulations.
Plaintiffs argue these advertisements effectively misrepresented the nature of the service, enticing residents to participate in high-risk games that led to financial losses under the guise of sweepstakes gaming. The lawsuit also claims that the plaintiff and others were drawn into spending money on games advertised as legal sweepstakes while facing conditions that severely limited their chances of reclaiming any financial gains.
Lead plaintiff Stephanie Cox asserts she spent $300 on VGW's platforms, including Chumba Casino, believing the sites operated within the bounds of Connecticut law. According to Cox, her losses were the result of deceptive practices that allegedly diverged from the standards of legitimate gambling operations.
The lawsuit points out specific structural elements on VGW's sites that the plaintiffs claim manipulate users into unnecessary spending. For example, players can purchase coins that can eventually be exchanged for cash prizes, but a series of restrictions limits the benefit of these redemptions. Cox and other plaintiffs contend that limitations, such as only being able to request one withdrawal per day, extensive approval times for payouts, and a high minimum threshold for cashing out, left many unable to reclaim winnings, effectively turning the platform into a money sink under the appearance of a legal sweepstakes model.
The lawsuit contends that VGW exploited Connecticut's lack of explicit prohibitions against sweepstakes casinos to operate in the state under misleading pretenses, thus exposing consumers to potential harm. Plaintiffs are seeking to represent all individuals in Connecticut who have suffered losses through the use of Chumba Casino and other VGW platforms, demanding compensation for their financial damages as well as a reevaluation of VGW's marketing practices.
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Growing Pressure on Sweepstakes Casinos
The lawsuit against VGW arrives at a time when the legality of sweepstakes-based gambling models is under intense scrutiny in the US. In recent months, the American Gaming Association (AGA) and the Indian Gaming Association (IGA) have launched initiatives to educate the public and lawmakers on the nature of these platforms, which operate within a legal gray area in various states.
The industry has seen an increase in operators using a sweepstakes model to bypass more restrictive state gambling laws, raising concerns among regulators and stakeholders about consumer protections and the potential exploitation of players. During a recent educational series by the IGA, Chris Cylke, Senior Vice President of Government Relations for the AGA, described the legal status of sweepstakes casinos as murky, emphasizing the need for clearer regulatory guidelines as the industry continues to grow.
As with other sweepstakes casinos, Chumba Casino allows players to participate in games using virtual currency, some of which can be purchased with real money and converted back into cash prizes. This model has attracted regulatory attention due to its potential similarity to online gambling, despite being marketed as a form of sweepstakes.
The plaintiffs argue that the structure and restrictions of VGW's platforms deliberately hinder players from withdrawing winnings, thereby maximizing revenue for the company while limiting the chances for consumers to benefit financially. The lawsuit alleges that this setup is purposely opaque and effectively ensures that only a small fraction of players can recoup their winnings under the conditions imposed by the platform.
Beyond Connecticut, the suit against VGW highlights ongoing debates over how online sweepstakes casinos operate across the country. Some states have begun to take legal measures to address regulatory gaps concerning online sweepstakes models, with differing approaches based on interpretations of state and federal law.
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