While California voters went to the polls last November to soundly reject legal sports betting, a free-to-play social sportsbook, Fliff, was gaining traction in the state.
However, the sweepstakes-based platform is facing a class action lawsuit alleging that the company is actually “operating an illegal online sportsbook” in the Golden State.
A ruling on the motion is expected to be made by Judge Sunshine Suzanne Sykes on Sept. 1.
An adverse ruling on the case for Fliff could have a detrimental impact on potential California sports betting apps, as well as sweepstakes-model casinos.
Potential impact of Judge’s ruling
Earlier this month, Fliff lawyers filed a motion asking the lawsuit to be dismissed and compel the matter to arbitration on an individual basis.
Now, Judge Sykes is tasked with making a vital ruling on whether or not the arbitration agreement with class action waiver can be enforced.
If Sykes denies the motion to compel arbitration, the case could then move to a jury trial, which could extend the process by several months.
On the other hand, if she chooses to enforce the class action waiver and orders the matter to arbitration, the case would then proceed on an individual basis. In that case, damages to Fliff would be limited and it is unlikely the case moves any further.
Fliff social sportsbook, which operates in over 40 states, claims it has “unpacked sports betting into play-for-fun social gaming.”
However, the plaintiff in the lawsuit, Bishoy Neshim, declares that he lost over $7,000 using the app and wants over $5 million in damages for himself and others.
According to the plaintiff’s charge, Fliff does not meet the state’s definition of “sweepstakes” because the prizes it distributes are not dispensed by lot or chance. Rather, the company uses the sweepstakes model to entice customers with free Fliff Coins. Players are then lured into depositing US dollars before converting them into Fliff Cash.
Fliff has argued that Nessim agreed to the platform’s terms and conditions, thus agreeing that any legal challenges from the user needs to be handled through arbitration, not in the courts.
Months in the making
Neshim filed an 18-page legal complaint on June 6 in the US District Court for the California Central District with two law firms working on behalf of him and the rest of the class.
The US Central District of California Court in Riverside has hearing on the motion to compel arbitration scheduled for Sept. 29.
In addition to California, about a dozen other states prohibit users from obtaining Fliff Cash through real-money purchases.