A California lawsuit involving a popular social sportsbook, Fliff, will officially be settled by arbitration.
Sports betting in California fell flat in 2022 after two voters defeated two ballot initiatives. One would’ve allowed online sports betting to be run by non-tribal operators, and the other would’ve only legalized retail betting at tribal casinos and horse tracks.
However, Fliff is one of the Golden State’s few legal options in the current landscape. But it operates in a grey area.
Last summer, Fliff faced a class action lawsuit after a group claimed it was operating an illegal sports betting ring in California. The sportsbook fought similar battles in other jurisdictions.
Earlier this month, Central District of California Judge Sunshine S. Sykes granted Fliff’s request to settle the case in arbitration. The move is technically a win for Fliff, but the grey area still lacks clarity.
What is Fliff?
Fliff is a sweepstakes sports betting platform. Fans can play for fun while winning prizes at the same time. It’s a popular platform, as it’s legal in 41 states. Especially in states where traditional sports betting is still not legal, Fliff provides a fun alternative. It’s relatively new, founded in 2019.
Users can win Fliff Coins and Fliff Cash. The coins have no monetary value and are part of the playing-for-fun aspect. Fliff Cash, though, is redeemable for cash prizes and things such as gift cards.
To get started, users must purchase a package. These packages contain both coins and cash. Customers will then use those coins and cash to make typical wagers in traditional sportsbooks. Moneyline bets, point spreads, totals, live bets and prop wagers are all available on Fliff.
Fliff’s issue in California: Does it fall under state’s sweepstakes definition?
California law defines sweepstakes wagering as something free and by chance. According to the attorney general’s website, paying to enter or increasing your chances of winning is illegal under this definition.
Plaintiff Bishoy Neshim claims that the company doesn’t meet this definition, saying that the customer prizes are not based on chance.
“Fliff gives every user, regardless of local state, or federal law, the option to bet with ‘Fliff Cash’ which has a dollar-for-dollar equivalence to actual money and that can be withdrawn and wired directly to the users’ bank account. That’s the epitome of an online sports book,” the lawsuit reads.
The lawsuit also highlights that customers can win real money from sports wagering. Still, the operation is not approved, regulated or taxed in California like traditional sports betting would be.
Fliff, though, believes its model falls under the sweepstakes definition. Customers who participate in Fliff’s offerings must check a box to accept the “Terms of Use and Sweepstakes Rules.”
Fliff’s headquarters an important point of contention
Fliff lists its headquarters in Pennsylvania. The company says its sweepstakes rules align with what’s allowed in that state.
But Nessim argues that the company’s headquarters is actually in Texas. And that’s true, but it was originally in Pennsylvania and brought enough evidence to the judge. He claimed that since it’s operating in different states, it should adhere to California law. And that Texas and Pennsylvania’s laws contradict each other.
The court sided with Fliff, though.
“Despite the seeming unfairness of the situation as it exists, with Fliff being able to claim a connection to Pennsylvania despite it having moved to Texas where it now runs its business from, the Court finds, because Fliff’s principal place of business ‘at the time of contracting’ was Pennsylvania, there is a substantial relationship between Pennsylvania and the Parties,” Sykes said.
What does the latest news mean for Fliff?
This is big for Fliff.
Because the California judge ruled to send the lawsuit to arbitration, one person will decide the verdict — not a typical 12-person jury. This is also one way to expedite the case, as it takes up much less time than a traditional hearing. It’s a private process where both parties can still present their arguments and any evidence.
Because this case is closed in the courts, the move is viewed by Fliff as a win.
