Google and Apple are facing a lawsuit in New Jersey and are being accused of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act.
The suit focuses on the tech giants' role in hosting sweepstakes casino apps. This is a booming industry that has raised a lot of controversy because it operates in a legal gray area.
Julian Bargo, the main plaintiff, says he lost over $1,000 on these sweepstakes casinos. Apple and Google are among five defendants in the case.
What Are Sweepstakes Casinos?
Sweepstakes social casinos, such as Chumba and McLuck, are part of a thriving multi-billion-dollar industry, despite operating in legal ambiguity.
Players can play these games for free or spend money to access an additional "currency”, which can be used to win real money. These sweepstakes operators do not have to comply with regulations, obtain U.S. licenses or pay gaming taxes.
Even though they target American players, major companies run their operations from locations like Cyprus, Malta and Gibraltar.
Recently, the American Gaming Association (AGA) asked states to investigate into these sweepstakes games. As a result, some states have taken action against the companies, accusing them of breaking gambling laws and ordering them to stop operating.
The sweepstakes industry argues that people misunderstand its products, claiming that they focus on social gaming rather than gambling.
What The RICO Lawsuit Claims
The lawsuit accuses Apple and Google of illegally making money from sweepstakes casino activities. It states that because Google and Apple take a share of profits from apps in their stores, including these social casinos, and provide payment methods within these sweepstakes sites, they are involved in the wrongdoing.
Bargo says that sweepstakes casinos pretend to be social casinos but are unregulated and lack oversight. The complaint presents several marketing examples that, according to the plaintiff, are deceptive promotions designed to trick users into thinking these sites are free to play.
The suit also comes at a time when Google just updated its Personalized Ads policy to remove social casino game apps from the restricted “Gambling” sensitive interest category.
Sweepstakes Casinos Are Big Business
According to a recent story in The Washington Post, the rapid growth of sweepstakes casinos is getting the attention of the regulated gaming industry, which sees online casino games as a highly profitable market. Currently, only seven states have legalized and licensed online casinos, even though online sports betting is widespread.
Last year, legal online gaming brought in more than $6 billion in gross revenue, according to the AGA. In comparison, Australia-based Virtual Gaming Worlds, which runs Chumba Casino, reported $4 billion in revenue in 2023, while legal sports betting, which is legal in nearly 40 states, earned roughly $11 billion.
A class action suit, similar to the one filed against Google and Apple, involved the sweepstakes sportsbook Fliff. That case was sent to arbitration earlier this year.
