Federal judge in Minnesota refuses to send Stake.us gambling-loss suit to arbitration

A Minnesota player's proposed class action against Stake.us will stay in federal court for now. In a July 1 order in Wolters v. Sweepsteaks Ltd., the U.S. District Court for the District of Minnesota denied the operator's motion to compel arbitration under its terms and conditions.

Plaintiff Chris Wolters alleges Stake's sweepstakes casino violated Minnesota's gambling and consumer protection laws. His five counts seek recovery of gambling losses under a state statute and relief under the Minnesota Consumer Fraud Act, the Deceptive Trade Practices Act and the state's false advertising law, along with a claim for unjust enrichment.

The court gave two independent reasons, according to an analysis by the law firm Kilpatrick Townsend. First, the terms that contain the arbitration clause may be void under Minnesota's gambling statutes, which would void the clause as well. Second, Stake did not show that Wolters ever accepted the terms; a screenshot it submitted did not include his name or evidence of his agreement.

The decision has been appealed to the Eighth Circuit, and the Kilpatrick Townsend analysis questioned whether the court read the arbitration clause correctly. Arbitration clauses are a central defense for sweepstakes operators facing player lawsuits, so the appeal could matter well beyond this case.