^{Screenshot of a LuckyLand Slots promotion. These games have fallen under legal scrutiny as some question the loophole that so far has allowed them to operate without any regulatory oversight. (Image: Google Play)}

Sweepstakes casino owner VGW Holdings Ltd. is facing yet another legal challenge in the United States, as Connecticut residents have launched a class action lawsuit against the company claiming that it defrauded users.

The lawsuit alleges that the Australian company is conducting illegal gambling while attempting to market their sites as distinct from traditional online casinos.

Lawsuit Claims VGW Defrauded Players

The Connecticut Department of Consumer Protection sent a cease-and-desist letter to VGW, telling the company to stop operating in the state in February. However, the lawsuit claims that the company kept its sites live in the state until sometime in September or October.

Sites owned by VGW include Chumba Casino, Sweepstakes Casino, and Luckyland Slots. 

“VGW MALTA, VGW LUCKYLAND, and VGW GP claim to be video game development business entities and operators of a ‘social casino,’” the lawsuit reads. “In reality, VGW has created, and operates popular virtual internet gambling casinos that market online gambling casino games.”

The plaintiffs in the class action argue that VGW committed fraud when it claimed via advertisements that its operations were legal and legitimate, which the lawsuit alleges they were not. The lawsuit is hoping to recover player losses from gambling on the site.

The Connecticut case is the latest in a long line of state and federal actions that VGW is defending itself from. Federal lawsuits have been launched in Mississippi, Tennessee, Florida, and other jurisdictions.

The Controversial Rise of Sweepstakes Casinos 

Sweepstakes casinos offer many of the same slots and table games that players would see at other online casinos and poker rooms. However, these sites attempt to skirt gambling laws by offering a social casino as their main product, while only awarding prizes in what they refer to as sweepstakes games.

Typically, players can earn “sweeps coins” just from logging into their account, interacting with a site on social media, or – as is the case with other “no purchase necessary” sweepstakes – by mailing a letter requesting such coins. However, users can also receive “free” coins with the purchase of free play currency on the site, which can only be used for non-prize social casino games. If players win enough “sweeps coins,” they can be redeemed for cash or prizes such as gift cards. 

The operators of sweepstakes casinos say that these rules allow them to conform to both gambling and sweepstakes laws in most states. However, there are several states where these games are not available due to differences in regulations, while other states – including Connecticut, Delaware, Washington, and Michigan, among others – have sent cease-and-desist letters to sweepstakes casino operators. 

The fight over sweepstakes casinos is reminiscent of the battles in some states over so-called skill games. These machines similarly look to offer slots-style games with a few minor changes to conform with gambling regulations, adding skill-based elements at various points to distinguish them from traditional slot machines.