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Gambling Company to Stop Offering Illegal Casino-Style Games in California under $3.5-Million Court Settlement

A gambling operator that created and offered casino-style games that served illegal gambling is set to cease its operations in California as part of a court settlement that was announced on October 28th. The gambling firm is also to pay a total of $3.5 million to the state.

As announced by the state’s attorney general, Pong Game Studios Corp. agreed on a settlement of an ongoing legal action that accuses the company of violating California legislation regarding false advertising and unfair competition.

The agreement was approved by a Superior Court judge from Solano County. According to the indictment, the Ontario-based gambling company, which creates video lottery and other game terminals and mobile casino-style games, confessed in the agreement that some of the services it offered across the state of California were fraudulent, unlawful and unfair as a complaint had alleged.

The lawsuit alleged the company of providing software solutions to so-called sweepstakes cafes that offer online poker- and slot-style computer games that offer consumers the chance of winning cash prizes.

According to claims, sweepstakes cafes circumvent illegal gambling legislation by often offering a product that includes sweepstake entries that allow people to play the aforementioned games. Such cafes are usually operated at convenience stores, gas stations, and out of storefronts. According to a white paper released by the American Gaming Association (AGA) in 2014, the cafes are available in more than a dozen US states. Estimates in the aforementioned white paper say the sweepstakes cafes generate over $10 billion on an annual basis. For the time being, such cafes are illegal in some states across the US, such as California.

Pong Game Studios Agrees Sweepstakes Games Were Unfair and Illegal

The gaming system of Pong Game Studios Corp. is comprised of a private network of computers and servers in the aforementioned sweepstakes cafes across the state. As revealed in the lawsuit, the company proceeded with its services offering even after the 2015 ruling of the California Supreme Court announced that gaming systems available in sweepstakes cafes were constituted as illegal gambling.

The state attorney general’s office and the Los Angeles city attorney’s office, as well as district attorney’s offices in 9 counties, joined forces to take the company to court.

Cynthia J. Zimmer, the District Attorney of Kern County, revealed in a statement that Pong Game Studios has violated California laws for years, flooding the state with unlawful gambling devices. She further noted that the company has been taking advantage of some of the most disadvantaged communities around the state, generating its revenue on the backs of vulnerable people. The illegal gambling software and devices had created unregulated pop-up casinos that had been attracting various types of criminal activity across the state.

Under the recently announced settlement, Pong Game Studios Corp. will be no longer able to design, manufacture, use or provide any illegal gambling software, device, or computer system in the state of California. It may also be held accountable for up to $15 million in case it does not manage to comply with the terms of the court settlement.

 Author: Hannah Wallace

Hannah Wallace has been part of our team since the website was launched. She has a master’s degree in IT.