California Wins $3.5M Payoff in Illegal Gambling Suit

Submitted by Associated Press on

Written by :

Associated Press

Published on :

OAKLAND, Calif. (AP) — A company that made and operated casino-style games used for illegal gambling will pay $3.5 million and permanently stop its California operations under a court settlement announced last Thursday.

aceperheadsep21.gif

Pong Game Studios Corp. agreed to settle a lawsuit that alleged it violated California laws on unfair competition and false advertising, the state attorney general's office announced. A Solano County Superior Court judge approved the agreement.

An email to the company seeking comment wasn’t immediately returned. But in the settlement, the company acknowledged that some of its operations were “unlawful, unfair or fraudulent” as alleged in the complaint, according to the indictment.

Based in Ontario, Canada, Pong Game Studios makes video lottery and other game terminals along with casino-style games for mobile phones.

The lawsuit said the company provided software to so-called “sweepstakes cafes" that offer Internet-based slot- and poker-style computer games with the possibility of getting cash prizes.

The cafes claim to avoid laws against illegal gambling by supposedly selling a product, such as prepaid telephone cards, that include sweepstake entries permitting customers to play the games. The cafes operate out of storefronts, gas stations and convenience stores in more than a dozen states and are estimated to take in more than $10 billion a year, according to a 2014 white paper by the American Gaming Association.

Some states, including California, have outlawed the cafes.

Pong's gaming system involved a private network of servers and computers in sweepstakes cafes up and down the state. The company continued operations even after the California Supreme Court in 2015 ruled that sweepstakes gaming systems were unlawful gambling, according to the lawsuit.

The company was sued by the state attorney general's office along with the Los Angeles city attorney's office and district attorney's offices in nine counties.

“For years, Pong has flouted California law and flooded our state with illegal gambling devices, profiting off of the harm done to some of our most vulnerable communities,” Kern County District Attorney Cynthia J. Zimmer said in a statement. “Pong’s illegal devices and software have bred unregulated pop-up casinos that have been magnets for criminal activity wherever they have arisen."

Under the settlement, Pong is barred in California from designing, manufacturing, providing or using any unlawful gambling device, software or computer system. It also may be held liable for as much as $15 million if the company fails to comply with the settlement terms.

Related Content

Omaha Nebraska Youth Baseball Organizer in Custody: Faces Theft Charges, Funds Allegedly Used to Fuel Gambling Problem

Omaha Nebraska Youth Baseball Organizer in Custody: Faces Theft Charges, Funds Allegedly Used to Fuel Gambling Problem

Sam Leng faces a theft by deception charge after families from the Omaha Nighthawks youth baseball team raised concerns in February. The Douglas County Sheriff's Office filed the charges against Leng late last week.
Two Men Wanted for Swindling MGM Springfield Massachusetts Casino

Two Men Wanted for Swindling MGM Springfield Massachusetts Casino

New York resident Gonzalo Capellan and co-defendant Ruddy Iglesia, of New Jersey are both accused of swindling the MGM Springfield Casino in Massachusetts.
Man Sentenced to 20 Years for Armed Robbery of Eastern Oregon Casino

Man Sentenced to 20 Years for Armed Robbery of Eastern Oregon Casino, Shooting Cop

According to court documents, on August 17, 2022, Vigil entered the Wildhorse Casino, walked straight to the cashier cage in the gaming area, and handed the cashier a note demanding $1 million.
3 Arrested Following Armed Robbery of Seminole Hard Rock Casino Tampa Patron

3 Arrested Following Armed Robbery of Seminole Hard Rock Casino Tampa Patron

The Hillsborough County Sheriff’s Office announced the arrests of three individuals suspected in an armed robbery of an individual returning from the Seminole Hard Rock Casino in Tampa on July 23.