The long-awaited resolution of the class action lawsuit filed against Fliff in June of the previous year by plaintiff Bishoy Nessim has concluded with a decisive ruling.
In a court session on Wednesday, Judge Sunshine S. Sykes, presiding over the California court, delivered her verdict favoring the defendant. The ruling concurred with Fliff’s assertion that the arbitration clause embedded in the terms and conditions of the sweepstakes sportsbook holds legal weight.
This development marks a pivotal moment in the legal dispute, bringing clarity to the contested issue surrounding the binding nature of the arbitration agreement, not solely for Fliff’s benefit but for other gaming entities.
Sykes, in her order granting Fliff’s arbitration request, supported the defendant’s argument that the legal jurisdiction of Pennsylvania should preside over the proceedings. This stance, she says, holds true even though a considerable portion of Fliff’s operations have been moved to Texas.
Nessim challenged this assertion, arguing that relocating the sportsbook to Texas weakens the connection to Pennsylvania. However, Judge Sykes dismissed Nessim’s argument, emphasizing the relationship between Pennsylvania and the involved parties primarily rooted in Fliff’s principal place of business “at the time of contracting.”
In her judgment, she wrote:
“Despite the seeming unfairness of the situation as it exists, with Fliff being able to claim a connection to Pennsylvania despite it having moved to Texas where it now runs its business from, the Court finds, because Fliff’s principal place of business “at the time of contracting” was Pennsylvania, there is a substantial relationship between Pennsylvania and the Parties.”
Sykes Identifies Lack of Context for “Unsophisticated Party” in Arbitration Agreement
With the court granting Fliff’s motion to move the case to arbitration, the legal proceedings have ended in the courtroom.
Judge Sykes acknowledged the ongoing debate over arbitration agreements in the legal system and provided a detailed discussion on the nature of Fliff’s arbitration agreement.
While recognizing that the agreement referenced American Arbitration Association (AAA) rules, Sykes pointed out a lack of sufficient context for an “unsophisticated party.” Despite this, she concluded that the court could determine the “arbitrability” of the case, which she delved into.
A noteworthy aspect of the breakdown was examining Nessim’s claim that he had no other alternatives in the market. Nessim argued in court that Fliff was operating as an illegal sportsbook.
Judge Sykes pointed out the contradiction in Nessim’s position, emphasizing that if he genuinely thought it was illegal, he could have opted for many other illicit options in the California black market.
In Search of a $5 Million Payday
On June 6, Bishoy Nessim filed a lawsuit against Fliff, alleging that the operator was running an illegal online sportsbook, thus infringing upon the Wire Act, the state’s Unfair Competition Law, and anti-bookmaking statutes.
The plaintiff in the lawsuit sought $5 million in compensation and urged for the immediate cessation of the sportsbook’s operations within the state.
“Despite that public rebuke, Fliff facilitates the ability for California residents to make online sports wagers to win real money without any approvals, regulations, oversight, or taxing,” the suit read.
“To avoid any regulation or legal oversight, Fliff claims to be a free-to-play operator of sweepstakes with the chance for users to ‘play sports prediction games for entertainment.’ But, in the real world, alleged sports prediction games are nothing more than online sports gambling.”
The plaintiff claimed that his losses on Fliff amounted to approximately $7,000 to $8,000.
The lawsuit asserted that Fliff is available for free download on both Apple and Android devices, allowing users to participate in gameplay using Fliff Coins, utilizing the well-known ‘free-to-play’ business model.
The claim further alleges Fliff attracts consumers with a free option and later guides them into real-money gameplay, referred to as ‘Fliff Cash.’