California Court Rejects High 5’s Motion in Sweepstakes Casino Lawsuit

The Superior Court of California has denied four recent motions filed by High 5 Entertainment’s legal team, including a request to strike the first amended complaint, a motion to quash the service of summons, and motions to compel arbitration and to initiate arbitration proceedings.

Superior Court of California Denies High 5 Entertainment’s Claims

This case involves a California-based lawsuit in which plaintiff Thomas Portugal claims that High 5’s online gaming platform misled him into spending money. In the latest ruling, the court found High 5 Entertainment’s efforts to push the case into arbitration to be “unconscionable.”

High 5 Entertainment argued that, typically, a court and not an arbitrator determines whether a dispute is subject to arbitration, unless the parties have clearly agreed to delegate that authority to the arbitrator. However, the court rejected this argument, concluding that there is no clear and unmistakable delegation. Citing court documents, the ruling emphasized that “any dispute… shall be resolved by a court and not be a subject of the arbitration.”

Plaintiff Portugal initially presented three main arguments against arbitration: that the dispute falls outside the scope of any arbitration agreement, that arbitration would be unconscionable, and that the contract itself is illegal and therefore void. It should be noted that the court agreed on the first two but not the third one.

In its decision denying the motion to quash service of summons, the court stated that it had considered the burden on the defendant, the interests of the forum state, and the plaintiff’s interest in obtaining relief. While High 5 argued that defending the case in California would be burdensome, the court found that the company demonstrated, at most, mere inconvenience. It also emphasized that California holds a substantial interest in enforcing its public policies related to gambling.

The Case Might Set a Precedent

This lawsuit is part of a growing trend of legal actions against sweepstakes casinos, which critics claim function as illegal online gambling operations. High 5, which has previously resolved similar cases in Washington and Connecticut, is now facing multiple legal challenges across several states, including New Jersey. Due to mounting regulatory pressure, the company has already withdrawn from certain US markets.

Legal analyst Daniel Wallach has noted that this recent court ruling could have major implications for the industry’s trajectory. With several similar lawsuits still pending across the country and new laws targeting dual-currency gaming models, sweepstakes operators are facing a landscape of increasing legal uncertainty. This case is one of several involving sweepstakes-style casinos in the US, each with the potential to establish new legal precedents for the industry. 

California is no exception to regarding sweepstakes casinos with an increasing negativity. In fact, the state is one step closer to banning sweepstakes casinos, as Assembly Bill 831, which aims to ban the practice, has continued to gain traction in California.