A company accused of peddling “unlawful, unfair or fraudulent” gaming solutions in California has admitted it violated state laws and is willing to make amends. Pong Game Studios Corp. will pay the state $3.5 million and close down its operations in the state in order to settle a lawsuit that could have led to greater damages.
Pong Game Studios Hit by California
Pong, based in Ontario, Canada, was sued by California for allegedly violating state laws in relation to the casino-style games it offered to gambling shops in the state. The company offers video gaming terminals, as well as specialty software, that provide digital lotteries and other games, and these have been popping up in states across the US, often trying to operate in a grey area of what is or isn’t classified as gambling.
The company reportedly offered software to “sweepstakes cafes” in California that, in turn, ran web-based gambling options for cash prizes. Pong has been providing its services to these cafes for a number of years, despite an order by the California Supreme Court in 2015 that sweepstakes gaming solutions are prohibited and unlawful in the state.
California went after the company in court and, perhaps knowing how the case was going to play out, decided to settle in order to limit its losses. The company has agreed to stop offering its services to the state and will pay a $3.5 million fine, which might just be enough to cover California’s legal fees in conjunction with the suit.
California Clamps Down on Gambling Cafes
According to the Associated Press, Kern County District Attorney Cynthia J. Zimmer said of Pong, “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. Pong’s illegal devices and software have bred unregulated pop-up casinos that have been magnets for criminal activity wherever they have arisen.”
This is a small victory for California, since controlling these cafes is not an easy task. However, it sends a message that could cause at least some of the operators and providers to rethink their actions. Law enforcement departments know where to look to find the cafes and machines, many of which are operating in convenience stores, gas stations and other independent stores.
The operators claim that the machines aren’t illegal gambling machines because gamblers, in most cases, don’t have to buy in directly to play. Instead, the cafes and shops sell certain products with sweepstakes entries attached, and these entries are what facilitate the participation. However, most states disagree, and California’s victory against Pong drives the point home.