Kentucky attorney general sues Virtual Gaming Worlds over sweepstakes casino products

Kentucky Attorney General Russell Coleman announced on Wednesday that his office has filed a lawsuit against Virtual Gaming Worlds (VGW) concerning its operation of multiple sweepstakes casino websites that sell digital coin packages to people in the commonwealth. The complaint asks a state court to find that the games on VGW’s sites violate multiple statutes, including those regulating gambling and protecting consumers from illegal activity.

Coleman’s filing correspondingly asks the court to enjoin VGW from offering casino-style games that use a dual-currency system to comply with sweepstakes laws in Kentucky. VGW could also face significant fines if the lawsuit is successful.

(Photo By Raymond Boyd/Getty Images)

Kentucky attorney general takes action to curtail sweepstakes casino gaming

Coleman claimed that “VGW and its affiliates operate unlawful sweepstakes casino websites that use two different types of virtual gambling chips” in a Wednesday press release, indicating the offending activity that the litigation will concern. The statement adds that VGW’s sites “exploit the same psychological triggers related to addiction” that licensed, real-money casinos may utilize.

The complaint filed with the Frankfurt Circuit Court goes into greater detail regarding how Chumba Casino, LuckyLand Slots, and other sites work to substantiate that the sweepstakes games therein are tantamount to unlicensed gambling. The filing points to the potential for disordered gaming as a justification for the allegations of violations of the Kentucky Consumer Protection Act (KCPA) as well.

As a remedy, Coleman asks the court to enjoin VGW “in any manner, continuing, maintaining or renewing the conduct, alleged herein in violation of the above stated Kentucky laws.” For Kentuckians who play on the sites, that would mean such activity would explicitly violate a state court order.

The complaint requests that the court impose fines as well.

• Civil penalties of up to $2,000.00 per willful violation of the KCPA
• Civil penalties of up to $10,000.00 per willful violation of the KCPA for Defendants’ conduct directed at a person aged sixty (60) or older
• Civil penalties of $25,000 per gambling device operated by Defendants

Each advertisement or other piece of messaging that VGW made available in Kentucky could represent a single violation of the KCPA, so these fines could surmount quickly to a substantial total. VGW may soon respond to this action in a manner similar to those it has taken in other state-level enforcement actions.

VGW’s options to avoid further enforcement in Kentucky

Many U.S. states, like neighboring Tennessee, have enacted laws explicitly banning sweepstakes casino sites, while in others, gambling regulators or law enforcement have acted against the same based on existing statutes. VGW has opted for one of three responses to these developments.

• Continue operating without any alterations
• Curtail operations to remove the dual-currency component of the websites
• Restrict access to games for people in the appropriate states entirely

Cameron’s lawsuit makes the dual-currency system of sweepstakes casino sites a focal point of the argument, so VGW deactivating that part of its products could bring its products closer to compliance with the conditions laid out in the complaint. However, there would still be the other outstanding consumer protection issues that don’t concern the digital currencies.

For that reason, VGW may instead opt to add Kentucky to its list of U.S. states in which it does not do business. There is no guarantee that would motivate Cameron to withdraw the lawsuit, but it would prevent any further violations the state could pursue.

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