Sweepstakes casinos face lawsuit from Baltimore

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Baltimore City on Wednesday sued six social casino operators, alleging they run illegal online gambling operations disguised as free games and sweepstakes.

Filed in Baltimore City Circuit Court, the lawsuit alleges that the defendants’ games are indistinguishable from online casino gambling, which is not allowed in Maryland. Casino gambling is only allowed at six locations in the state; sportsbooks offer the only legal gambling options online.

Social casinos offer casino-style games online, using virtual tokens rather than real money. The defendants allegedly skirt the law through a “dual currency” system in which players can buy tokens with real money, place bets with the tokens and win real cash prizes.

“Defendants do not offer a novel product that merely resembles gambling,” the complaint states. “They operate the same slot machines, blackjack tables, and roulette wheels found in licensed casinos — games for which the addictive potential is well-documented, which is precisely why Maryland subjects them to strict regulatory oversight.”

The defendants seek to entice young people with “colorful, cartoonish” graphics, and have extracted millions from the local economy, the complaint states.

The defendants operate Chumba Casino, Luckyland Slots, McLuck, Pulsz, Stake.us, High 5 Games and Fortune Coins. They are based in Malta, Cyprus, Estonia, Canada and Delaware.

“This lawsuit is about drawing a clear line: illegal gambling operations are not welcome in Baltimore,” Mayor Brandon Scott says in a press release.

“These companies are targeting our communities, including young people and minors, and profiting while ignoring the law. No company, especially those operating from overseas, gets to profit here while flouting our laws and endangering our residents.”

The city is seeking civil penalties, injunctive relief, restitution for consumers and disgorgement of profits.

None of the defendants immediately responded to requests for comment Thursday.

According to Gambling911, an industry news site, Baltimore is the second city to sue a sweepstakes casino. The first was Los Angeles, which filed a lawsuit against one of the same defendants, Stake.us, last September.

The lawsuit represents the latest in a string of consumer-protection or public-nuisance actions by the Baltimore City Law Department.

The city won hundreds of millions in settlements and verdicts from pharmaceutical companies through its lawsuits over the opioid epidemic. In August, a jury awarded a $62 million verdict against an Anne Arundel County firearm retailer for allowing the proliferation of “ghost guns.”

Lawsuits are ongoing against the online sportsbook DraftKings, the maker of the ZYZ nicotine pouch, the gun manufacturer Glock and the lending app MoneyLion, among others.

Meanwhile, the state is involved in a lawsuit with Kalshi, an online prediction market with offerings that are indistinguishable from sportsbooks, according to state regulators. Kalshi is allowed to operate in Maryland for now, as it appeals a district-court ruling in the state’s favor.

The Baltimore City Law Department is bringing the gambling case alongside the law firm DiCello Levitt, which has supported or is supporting the city in multiple other lawsuits.

“Baltimore is taking on an industry that has deliberately blurred the line between gaming and gambling to avoid regulation and accountability,” Adam Levitt, founding partner of the law firm, states in the release.

“These social casinos are not harmless entertainment. They’re designed to extract money through unfair, abusive, and deceptive practices.”