A San Francisco judge has handed a setback to High 5 Entertainment, refusing to throw out a lawsuit that accuses the online casino of misleading players. This ruling could shake up the sweepstakes casino world in California, where similar operations face growing scrutiny.
Thomas Portugal sued High 5, claiming he was tricked into spending money on what he calls an illegal gambling setup. Judge Christine Van Aken denied High 5’s motion to dismiss the case. She found Portugal’s claims of financial loss and deception strong enough to proceed.
High 5 argued that California laws block courts from handling gambling-related civil suits, pointing to past cases where players couldn’t recover losses. But the judge said those don’t apply here, as the focus is on alleged misleading practices, not just gambling debts.
The company also challenged Portugal’s right to sue under the state’s Unfair Competition Law, saying it lacked standing. Van Aken rejected that too, noting the complaint shows clear economic harm from an unlawful service.
In a small win for High 5, claims against its investor, Acies Investments Fund I, were dismissed. However, Portugal can still revise its complaint to include them again.
This decision spells potential trouble for other sweepstakes casinos eyeing California operations. These platforms use a two-currency model—free “sweeps” coins alongside purchasable ones—which critics argue skirt gambling laws. They say it’s still illegal betting in disguise.
High 5 has already settled similar cases in Washington and Connecticut and pulled out of some U.S. markets amid lawsuits in states like New Jersey. Legal expert Daniel Wallach warned that if High 5 loses big here, it could set a precedent, making it harder for sweeps operators to stay afloat in California. With more lawsuits and new laws targeting these models nationwide, the industry faces rising risks.
High 5 has another card to play: a motion to force the case into arbitration, based on its user agreement. Arbitration brings in a neutral third party to help mediate and resolve the conflict.
The terms require users to negotiate disputes first and then arbitrate, waiving court trials or juries. Courts have often upheld such clauses in past sweeps casino cases.
If the judge denies this, the lawsuit could head to trial—a rare move that might expose more industry practices. A win for High 5 on arbitration would reinforce these agreements as a shield against player suits.
Overall, this case highlights the shaky legal ground for sweepstakes casinos. Losing could force operators to rethink strategies or exit California, hitting their growth plans hard.
