Stake.us Alabama Lawsuit Still Waiting on Outcome

In May 2025, a group of Alabama residents filed a lawsuit against Stake.us at a federal courthouse. The case received brief industry coverage before fading from the spotlight. Nearly a year on, the case remains wide open and undecided. The plaintiffs’ request to the judge is narrow. However, the court’s reasoning could support a much broader outcome if the plaintiffs win.

The plaintiffs are asking the judge to prevent Stake.us from operating in Alabama and to order the company to refund any money spent on the platform. If the plaintiffs win, these requests will be granted within the state. However, it would also create a legal precedent that could be used by other plaintiffs and state attorneys general in their own courts. This would challenge the sweepstakes model under state gambling law, an area that the industry has largely avoided fighting on so far.

Why a case like this can sit quietly for so long

From the outside, a wait of eleven months between filing and ruling might suggest that a case has stalled. However, in federal civil litigation, this pace is normal and reflects how these cases progress.

Almost all the work in a federal civil case is carried out before anyone sets foot in a courtroom, in the form of written motions and briefs exchanged between the parties and ruled on by the judge. According to data from the Administrative Office of the US Courts (Table T-1 and Table C, ‘Federal Judicial Caseload Statistics’, 31 March 2025), only a small proportion of federal civil cases ever reach trial. The rest are resolved earlier through motions to dismiss, summary judgment rulings or settlements. Each of these outcomes involves written arguments, response deadlines and rulings from the judge. The months between filing and resolution are almost entirely filled by this kind of written exchange.

Class actions take longer than most federal cases because, before the underlying dispute can be argued, the court must first decide whether the case can be heard as a class action. Answering this question necessitates an additional round of briefing and ruling, and it is almost always the initial significant procedural step in such a case. This is also the stage that the Stake.us complaint is currently at, almost a year after it was filed in the US District Court for the Middle District of Alabama in May 2025. Federal court caseload data varies by district, but civil cases routinely take years to reach resolution. This places a case at the eleven-month mark well inside the expected timeframe’s early stages.

The Kentucky docket exemplifies what the second half of such a timeframe may consist of. In 2021, a class action lawsuit was filed in the Western District of Kentucky against VGW, the Australian company that operates Chumba Casino and LuckyLand Slots. The legal arguments in this case were closely aligned with those in the Alabama complaint. For nearly three years, the case progressed through the federal system largely out of public view before the plaintiffs were awarded $415.5 million in October 2024.

In both Kentucky and Alabama, these arguments are based on a legal theory that can be traced back further than either case to a dispute that the Alabama courts have already had with a previous generation of gambling operators.

The ghost in the complaint: Alabama’s war on internet cafés

The earlier fight began in the early 2010s, when Internet sweepstakes cafés opened across the state of Alabama. These cafés sold prepaid phone minutes or internet time, and offered free sweepstakes entries with each purchase, and customers played the entries on terminals resembling slot machines.

Then-Attorney General Luther Strange argued that the retail aspect was irrelevant. Following a series of raids by state and local authorities, Alabama’s appellate courts ultimately agreed with him, ruling that the model constituted gambling, regardless of its presentation. By the middle of the decade, most of the cafés had disappeared.

More than a decade later, the plaintiffs in the Stake.us case are asking the court to apply the same reasoning to a newer digital version. They are making this argument in a state that has become slightly less tolerant of gambling since the cafés were shut down.

Alabama’s political backdrop is part of the story

The same attitude runs through Alabama’s laws. The state constitution has banned lotteries since 1901, there are no commercial casinos operating within its borders, and online sports betting is still not permitted. Governor Kay Ivey’s 2024 gambling package, which aimed to bring lotteries, casinos, and sports wagering together under a single regulator, was rejected by the state Senate by a single vote, and subsequent bills have failed to gain sufficient support.

This means that any judge reading the Stake.us complaint is working from a statute book that has been repeatedly backed up by a legislature which has chosen to prohibit most forms of gambling. Context like this usually matters as much as the technical side of a case.

What a ruling could put in motion

Stake.us is currently facing three lawsuits, which can be attributed to the company’s rapid growth. After entering the U.S. market in 2022, Stake.us quickly grew its audience by forming strategic partnerships with popular Twitch and Kick streamers, and maintaining an active presence on X and Instagram.

This growth brought the company to the attention of plaintiffs’ firms outside of Alabama. In 2025, two of those firms filed class action lawsuits in California and Illinois based on legal arguments similar to those in the Alabama complaint.

So far, Stake.us has chosen not to make any public statements, directing its response to court filings instead. In these filings, Stake.us has defended its dual currency structure as lawful sweepstakes activity and has sought to dismiss the Alabama complaint on those grounds.

A ruling in Stake.us’s favor in Alabama would not be limited to that one case because the three lawsuits are based on similar legal arguments. Therefore, a win in Alabama would strengthen the company’s position in California and Illinois. Besides the current cases, a ruling in Stake.us’s favor would bolster the broader sweepstakes defense. It would also slow the wave of state-level litigation that has built up against the sector since early 2024.

In contrast, a ruling the other way would have the opposite effect, effectively weakening the defendants’ case in the California and Illinois cases almost immediately. If the Alabama decision is written in a way that other states could cite, it would provide plaintiffs’ firms and state attorneys general with a proven argument to present in their own courts. Several state legislatures are already addressing the issue.

Over the past eighteen months, Connecticut, Montana, and New Jersey have introduced bills aimed at defining or restricting sweepstakes casinos. Attorneys general in New York, Michigan, and Mississippi have also sent cease-and-desist letters to operators in the sector. This activity is of particular importance because the industry currently operates in more than forty U.S. states based on a single federal promotional doctrine. This means that if a state court rejects that doctrine, the rejection does not stay in one state. This is why every plaintiffs’ firm, state attorney general’s office, and sweepstakes operator in the country is closely watching the outcome in Alabama.