Tech giants Apple and Google face intense legal scrutiny in New Jersey after being named in a lawsuit accused of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act. 

The statute was initially enacted to combat organised crime syndicates but is being used to target the tech icon’s involvement in hosting sweepstakes casino apps. 

Sweepstakes Casinos: A Rising Trend 

Sweepstakes casinos are a growing market sector that has created controversy due to their novel operating model and regulatory grey areas. These casinos allow users to play for free or to spend money on virtual currency.  

This virtual currency can unlock features in games often associated with gambling, such as slots, blackjack, roulette and poker. These casinos are different to free-to-play casinos as they have added sweepstakes components, such as real-money prizes. 

Critics argue that while these platforms are popular for their accessibility and entertainment value and appear to fall in line with current applicable laws, which vary by state, they essentially turn smartphones into unregulated gambling devices. 

Unlike traditional online casinos, sweepstakes casino operators are not licensed or regulated in the US and avoid paying gaming taxes despite primarily catering for American consumers. Most of these major sweepstakes casinos are based offshore.  

The rise of sweepstakes casinos has not gone unnoticed by the regulated gaming industry of the American Gaming Association (AGA).  

The AGA and other stakeholders in the regulated online casino market view the sweepstakes casino model as a competitive challenge because it operates outside the bounds of traditional oversight.   

 New Jersey Lawsuit Targets Apple and Google 

New Jersey resident Julian Bargo filed the class action lawsuit, claiming Apple and Google assisted, promoted, and profited from unlawful casino applications. 

The lawsuit in New Jersey accuses Apple and Google of facilitating the proliferation of sweepstakes casinos by allowing their apps on the Apple App Store and the Google Play Store.  

The lawsuit claims that by hosting these platforms, the tech companies allegedly are enabling the industry to skirt the US gambling laws while potentially exposing consumers to financial risk of psychological harm.

The class action suit says:

Quote

“The casino game operators misleadingly describe themselves as ‘social casinos’ to promote the deception that their websites and apps are free to play for entertainment purposes only,”   

Bargo claims to represent consumers who lost money wagering in an online sweepstakes casino operated by websites with the assistance and participation of Apple and Google.  

 Unwitting Sweepstakes Customers?

Bargo argued that Apple and Google granting access to the casino apps helped turn their smartphones, iPads and tablets into “illegal gambling devices and/or slot machines.” 

It was further alleged that Apple and Google also use search algorithms within their respective web browsers to “shepherd unwitting customers” to the game operators’ websites and apps, thereby “facilitating the (operators) unlawful gambling enterprise.” 

The plaintiff is demanding a jury trial, requesting declaratory and injunctive relief, and an award of damages for himself and all class action members. 

Sweepstakes have stirred controversy, and we will continue to follow the progress of this case and the reactions of regulated online casino market stakeholders.