The United States District Court, Northern District of Georgia dismissed a class action lawsuit filed by Fair Gaming Advocates Georgia Inc. against VGW Holdings Limited and its subsidiaries, citing lack of personal jurisdiction over the defendants. This ruling highlights the challenges faced by private civil litigation in testing the legality of the sweepstakes casino business model.US District Judge Thomas W. Thrash Jr. ruled on December 13, 2024, that the court could not exercise jurisdiction over the defendants, who are primarily based in Australia, Malta, and Delaware. The court found that the defendants’ minimal contacts with Georgia, including two non-executive employees working remotely and accessible gaming websites, were insufficient to establish personal jurisdiction.This decision comes amid increased regulatory scrutiny on sweepstakes gaming across the United States. VGW has been defending multiple class actions in state and federal courts nationwide.In a related development, VGW announced the wind-down of its Global Poker brand in Nevada, effective April 15, 2025. The company will continue to operate Luckyland Slots and Chumba Casino in the state.Meanwhile, the Social and Promotional Gaming Association (SPGA) has released its Code of Conduct, aiming to set standards for its members in the social gaming and sweepstakes sector.
Potential Outcomes for Other Class Actions
Given the Georgia court’s ruling, it’s likely that similar jurisdictional challenges may arise in other states where class actions have been filed against sweepstakes casinos:
- Washington: As one of the strictest states regarding sweepstakes regulations, the case may have a higher chance of proceeding. However, defendants could still argue lack of personal jurisdiction if they have minimal physical presence in the state.
- New Jersey: With its established gambling industry, New Jersey courts may be more inclined to hear the case. However, jurisdictional challenges could still be raised if the defendants lack significant ties to the state.
- Delaware: Being the home state for some VGW subsidiaries, personal jurisdiction may be easier to establish here. This could potentially lead to a more substantive legal battle on the merits of the case.
- Alabama: Similar to Georgia, Alabama may face jurisdictional hurdles. The outcome could depend on the specific facts regarding the defendants’ connections to the state.
In all these cases, defendants are likely to employ similar jurisdictional defenses and arbitration clauses to challenge the lawsuits. Those that survive these initial hurdles may face prolonged litigation or potential settlements, as companies like VGW may prefer to avoid the risk of adverse judgments that could have national implications
The ruling in Georgia dismissing the class action lawsuit against VGW Holdings Limited could potentially influence the legality of sweepstakes gaming in other states, but the impact may vary:
Washington: The ruling is unlikely to significantly influence Washington’s stance, as sweepstakes casinos are already explicitly banned in the state. Washington’s strict regulations make it less likely for the Georgia ruling to have a substantial impact.
New Jersey: The ruling might have limited influence in New Jersey due to its established gambling industry. However, the state may still face jurisdictional challenges similar to those in Georgia when dealing with sweepstakes casinos.Delaware: The Georgia ruling may have less impact in Delaware, as some VGW subsidiaries are based there, potentially making it easier to establish personal jurisdiction. Delaware might be more inclined to address the legality of sweepstakes gaming on its merits rather than dismissing cases on jurisdictional grounds.
Alabama: The Georgia ruling could have a more significant influence in Alabama, as it may face similar jurisdictional hurdles when dealing with sweepstakes casinos that have minimal physical presence in the state. It’s important to note that the legal landscape for sweepstakes gaming is evolving. Some states, like Michigan, have taken strong stances against sweepstakes casinos, while others are still grappling with how to regulate them. The National Council of Legislators from Gaming States (NCLGS) has proposed model legislation that would prohibit sweepstakes games, indicating a potential trend towards stricter regulation
