High 5 Entertainment Faces Setback in California Legal Battle

Judge Allows Lawsuit Against High 5 Entertainment to Proceed in California

A California court has delivered a preliminary ruling that goes against High 5 Entertainment in a legal dispute with significant implications for sweepstakes-style casino operations in the state.

On August 14, Judge Christine Van Aken of the San Francisco Superior Court denied a motion to dismiss claims brought by plaintiff Thomas Portugal. Portugal alleges that High 5’s online gaming platform deceived him into spending money. Judge Van Aken found the plaintiff’s assertions of financial loss and deception compelling enough to allow the case to move forward.

High 5 argued that California law prevents courts from adjudicating civil matters related to gambling, citing prior cases that barred players from recovering gambling losses through litigation. However, the judge rejected this defense, stating that previous rulings do not apply here because the plaintiff claims he was misled into participating in what he describes as an illegal scheme.

The court also considered High 5’s contention that Portugal lacked standing to sue under California’s Unfair Competition Law. Judge Van Aken disagreed, highlighting that the complaint alleges financial harm resulting from an unlawful service, which suffices to maintain the lawsuit under state law.

While High 5’s motion to dismiss was denied, the decision provided some relief to one of its financial backers. Acies Investments Fund I, a minority stakeholder in the company, had claims against it dismissed, though the plaintiff retains the option to amend the complaint.

Potential Impact on Sweepstakes Casino Industry in California

This lawsuit is part of a broader wave of legal challenges targeting sweepstakes casinos, which critics argue operate as illegal online gambling enterprises. High 5, having previously settled similar disputes in Washington and Connecticut, now faces multiple lawsuits in various states, including New Jersey. Regulatory pressures have already led the company to exit certain U.S. markets.

Legal analyst Daniel Wallach has observed that this recent court decision could significantly influence the industry’s future. With several analogous lawsuits pending nationwide and new legislation targeting two-currency gaming models, sweepstakes operators are confronting increasing legal uncertainties.

For now, the legal proceedings against High 5 in California continue, and forthcoming rulings could potentially reshape how these gaming platforms operate within the state.