Last week, Arkansas Attorney General Tim Griffin filed a lawsuit against sweepstakes casino operator VGW for what he considers illegal gambling. VGW owns Chumba Casino, LuckyLand Casino, and Global Poker.
“Arkansas’s gambling laws are clear. If you’re providing a means for Arkansans to gamble money within our state, you are subject to the rules and regulations that govern legal gambling,” Griffin said in a statement after filing the lawsuit.
A VGW spokesperson told Sweepsy: "We strongly reject these allegations and will respond further in due course."
VGW claims that it is not operating a gambling business. But Arkansas disagrees. That’s why he has sued VGW for violating the Arkansas Deceptive Trade Practices Act.
VGW says it does not provide gambling services
VGW rests its claim that it does not provide gambling services on a distinction between two virtual currencies: Gold Coins, which can be purchased but not redeemed for cash, and Sweeps Coins, which cannot be purchased but can be redeemed for cash.
“One is called ‘Gold Coins,’ and it is effectively worthless,” Griffin said. “But consumers purchase Gold Coins with real money. When they do, they receive ‘Sweeps Coins’ as a bonus. Sweeps Coins can be used to play online casino-style games, and users can redeem Sweeps Coins they win through those games for actual cash. Any reasonable person would call that gambling.”
Decades before VGW launched its platforms, internet sweepstakes cafes promoted a similar arrangement.
“Consumers paid money for internet time, received ‘free’ credits, and used those credits to play games for the chance to win cash prizes,” Griffin said. “When challenged, the cafes argued that consumers were paying for internet time, not the opportunity to gamble. Courts repeatedly rejected the attempt to circumvent gambling laws by calling the activity a sweepstakes.
“VGW’s claim that the distinction between the virtual currency one buys and the virtual currency one redeems is weak at best, and courts have rejected this too-cute-by-half logic time and time again. Companies that operate gambling businesses in Arkansas are subject to our gambling laws, plain and simple. Our lawsuit seeks relief that includes restitution, penalties, taxes, and injunctive relief.”
In September, VGW agreed to pay New York $8 million although it didn't admit fault related to what the state's attorney general accused it of. VGW is also facing lawsuits from attorneys general in Kentucky and Florida.