Federal Court Ruling Highlights Difficulty in Litigating Online Sweepstakes Casinos

Posted on: December 19, 2024, 11:06h. 

Last updated on: December 19, 2024, 01:29h.

Devin O'Connor @CasinoorgDevinO Read More

Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

A recent federal court ruling highlights the difficulty of successfully litigating or prosecuting an online gaming website that operates offshore from another country.

Earlier this week, a federal judge in Georgia’s Northern District said the court lacked jurisdiction over the named defendants, VGW Holdings Limited and its subsidiaries. Judge Thomas Thrash wrote that the defendants, a group of state citizens who claimed they had gambled and lost money playing VGW’s online sweepstakes casinos for four years, lacked personal jurisdiction over VGW.

While the Defendants casino gaming websites were certainly accessible by Georgia users and the Defendants accepted payments from Georgia users in order to play the games, the Court finds this limited interaction … insufficient to satisfy the transacting business prong [in the Georgia Code],” Thrash wrote.

VGW operates several online gaming platforms that bill themselves as social sweepstakes casinos.

Its websites and apps, with LuckyLand Slots, Chumba Casino, and Global Poker a few VGW notables, allow new users to initially play for free. They can’t win actual money with their free gaming tokens, but once those credits run dry, customers can purchase a secondary digital currency, commonly called sweeps coins, that can be gambled and converted to actual cash.

Jurisdictional Overview

VGW is an Australian-registered online gaming enterprise that operates from the iGaming-friendly jurisdiction of Malta. VGW is also registered as a corporation in Delaware.

Thrash said that the companies are largely immune from civil litigation because VGW primarily runs its websites from remote locations not based within Georgia or even the United States. The judge said that even if VGW was subject to US court jurisdiction, applying the Georgia Code to overseas businesses would present problems.

Even if it were, the exercise of jurisdiction under the long-arm statute would offend traditional notions of fairness and substantial justice because the Defendants could not reasonably have expected to be hauled into court in Georgia (or any state, for that matter), solely because their websites are interacted with by residents of the state,” Thrash wrote.

“Although a foreign company can be subject to general jurisdiction in a state where its affiliations with the State are so continuous and systematic as to render it essentially at home in the forum State, the Defendants’ affiliations with Georgia fail to satisfy this standard,” Thrash concluded in granting VGW’s motion to dismiss the civil action.

Far-Reaching Ruling

Daniel Wallach, a prominent attorney in the US gaming industry, opined on X that Thrash’s ruling “exemplifies how difficult it is for private civil litigation to serve as the vehicle for testing the legality of the sweepstakes casino business model.”

VGW has pulled its online gaming operations in Connecticut, Idaho, Michigan, Montana, and Washington after receiving such warnings. Officials in Kentucky, Louisiana, Nevada, and Washington, DC have also publicly declared online sweepstakes casinos to constitute illegal gambling.