Los Angeles prosecutors have launched a civil case that could redefine the sweepstakes casino sector. Stake.us, streaming platform Kick, founders Ed Craven and Bijan Tehrani, along with more than a dozen gaming suppliers, are accused of running or assisting in an illegal gambling business in California.
The lawsuit is the first government enforcement action against a sweepstakes casino in the United States. By including developers and a marketing partner, the case widens the net beyond operators, signaling a new regulatory approach that could reverberate throughout the industry.
Expanding Liability Beyond Operators
In a break from past practice, prosecutors have named content providers as defendants. Evolution, NetEnt, Red Tiger, Big Time Gaming, and Hacksaw Gaming all supplied games to Stake.us. For large companies such as Evolution, valued at €18 billion, and smaller firms like Hacksaw at about €2 billion, U.S. legal pressure could pose serious risks. Analysts warn suppliers may pull back from sweepstakes partnerships if liability continues to spread.
Filings describe Stake.us as a “mirror” of Stake.com, the company’s international casino and sportsbook, which is blocked in most U.S. jurisdictions. Regulators allege Stake.us was built to bypass California law, offering the same interface and catalogue of slot and table games.
Its dual-currency system allows players to purchase “Gold Coins” without cash value while receiving “Sweeps Coins” or “Stake Cash” that can be redeemed for cryptocurrency or gift cards. Authorities argue this structure disguises real-money gambling under the sweepstakes label.
Marketing Platforms in the Crosshairs
The case also targets Kick, the fast-growing streaming service linked to Stake’s founders. Kick has promoted Stake.us through sponsored creators broadcasting casino-style content. Prosecutors argue this makes the platform an active participant in the alleged scheme, not a neutral distributor.
This move mirrors a wider enforcement trend. Other lawsuits have already named social media influencers tied to sweepstakes operators. If successful, the Los Angeles action could subject marketing channels to heightened scrutiny.
California’s Larger Crackdown
California banned physical “internet sweepstakes cafes” in 2015, but online equivalents have continued to operate in a legal gray area. Assembly Bill 831, now advancing in the state legislature, would extend the ban explicitly to digital platforms like Stake.us.
The lawsuit invokes California’s Unfair Competition Law and False Advertising Law. It seeks an injunction to shut Stake.us down in the state, restitution of losses to residents, and penalties up to $2,500 per violation — rising to $7,500 for violations involving seniors or disabled individuals. Damages could reach into the billions.
A Test Case for the Future
For City Attorney Hydee Feldstein Soto, the first woman and Latina to hold the position, this action represents the first U.S. civil enforcement case against a sweepstakes casino. Her office, working with Susman Godfrey LLP, aims to set a legal template other prosecutors across California may follow.
As the state’s largest market, California plays an outsized role in the sweepstakes casino business. A ruling against Stake.us could force developers, platforms, and operators alike to rethink their involvement in an industry increasingly viewed by regulators as illegal gambling.
Source:
“Los Angeles City Attorney files landmark lawsuit against Stake.us and partners”, x.com – Daniel Wallach, August 29, 2025
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