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Pragmatic Play has decided to withdraw its services from operating in the US. This decision comes as a response to the civil lawsuit by the Los Angeles City Attorney against Stake.us. Attorney Hydee Feldstein Soto is suing Stake.us for operating an illegal online gambling business.
Despite not being licensed in the US iGaming Market, Pragmatic was named in the enforcement action of this lawsuit. Other named game suppliers include Kick Streaming, Evolution, NetEnt, Red Tiger, Hacksaw Gaming, NoLimit City, and Twist Gaming.
This lawsuit is notable for being the first of its kind. LA City Attorney Soto becomes the first US official to take direct legal measures against sweepstakes casinos.
What Prompted Pragmatic Play’s Exit
The software provider’s decision to exit the US sweepstakes casinos sector is primarily a precautionary move. In an email statement, the company confirmed it will no longer license its software to sweepstakes casinos in the US.
In the email, the company stated that Pragmatic Play has decided to stop licensing its games to sweepstakes operators in U.S. states without existing regulations, citing ongoing regulatory changes and shifting legislation. The company reaffirmed its focus on compliance and noted that it will continue to collaborate closely and transparently with regulatory bodies.
Although not a direct defendant in the case between the City of Los Angeles and Stake.us, Pragmatic is listed as one of several suppliers whose games appeared on the platform, effectively tying them into the litigation.
Stake is accused in the lawsuit of engaging in unfair competition and false advertising. For many in the industry, this stance seems heavy-handed. Based on this, it appears that regulators are likely to target gambling operators and software providers that power their platforms. How the situation will unfold is still uncertain.
In the meantime, Pragmatic Play chose to withdraw before matters escalated further. However, they are not alone. Hacksaw Gaming and Evolution have made a similar move, pulling out all of their games from Stake.us’s California sweepstakes platform.
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California Sweepstakes Legislation Moves To Senate
Interestingly, Pragmatic’s withdrawal coincides with the proposed passage of California’s anti-sweepstakes bill. If passed, the Assembly Bill 831 (AB831) will criminalise sweepstakes casinos that are unregulated or without a tribal-state compact.
The bill would also make it illegal for companies to facilitate or promote online sweepstakes operations. This prohibition could extend to game providers, payment processors, and media affiliates working with sweepstakes operators.
Support for the measure grew after the Senate Appropriations Committee unanimously passed Assembly Bill 837 (AB837) on August 29 with a 7-0 vote. In a notable development, AB837 sets penalties for operators running sweepstakes casinos. Fines for that offence will range from $1,000 to $25,000. The California Senate must act on the bill by September 12 before the legislative session concludes.
Is Pragmatic Play Preparing for Expansion Into US Regulated Markets?
Pragmatic’s decision to exit the US sweepstakes casino has raised eyebrows since the developer is not currently active in the licensed US iGaming market. For many, Pragmatic has taken this step to reset its operations.
The expectation is that the game provider will likely seek a license to operate legally in the US-regulated iGaming market in the future. The company currently holds licenses in over 40 countries. So it already has the structure in place to meet future licensing requirements in the US.
By avoiding further legal confrontations, Pragmatic demonstrates its ability to comply with U.S. regulations. The company is also positioning itself for partnerships with regulated gambling operators, such as DraftKings and FanDuel.
While growth in the US-regulated iGaming market has been gradual, it has gained momentum in recent years. Seeking more substantial long-term returns, Pragmatic Play is building a track record of compliance by withdrawing from the US sweepstakes casino sector.
The company has not presented direct evidence to confirm this outlook. However, it is reasonable to expect that Pragmatic Play will aim to enter the regulated US iGaming market in the future.
The withdrawals of Hacksaw Gaming and Evolution from the sweepstakes industry in California further reinforce this trend. Both software developers are also likely to be keen on entering the regulated iGaming markets in the US. By withdrawing their services in California, they are also creating a record of compliance with legal regulatory bodies.
Where Will Pragmatic Play Focus Next?
The company’s next move is still unclear, but expansion into the regulated US iGaming market remains a possibility. If they choose this path, expectations are that the process will move forward without delay.
The company has an excellent portfolio of top-notch new sweepstakes casino games that enjoy immense popularity. They have also become a household name, renowned for their reliable casino software. For now, the company will continue its operations in Canada and Europe, where it is most popular.
