California Orders Pong Game Studios to Pay $3.5m for Illegal Gambling Operations

  • Pong must pay $3.5m and halt all its California operations involving illegal gambling
  • The game developer may get held liable for $15m if it fails to comply with the settlement terms
  • Pong has agreed to settle a suit alleging it broke California laws, including unfair competition
  • Pong continued illicit betting operations despite a 2015 California Supreme Court ruling 
  • AGA estimates US sweepstakes cafes earn over $10bn a year through unlawful gambling 
Wooden gavel next to money
Pong Game Studios has to get its illegal gambling operations out of California, plus it must pony up $3.5m as per an order from the state. [Image:]

Judge signs off on order

Solano County Superior Court Judge E. Bradley Nelson has signed off on an order against Pong Game Studios. Under the terms of the judgment, the operator must pay $3.5m and permanently halt the design, manufacture, provision or use of any illegal gambling device, software or computer system in the state of California.

California’s Attorney General Rob Bonta took to Twitter on Friday to share news of the formal court approval of the multimillion-dollar stipulated judgment:

Under the agreement, a court may hold Canada-based Pong liable for as much as $15m if the company — which makes gaming terminals along with mobile casino-type games — fails to comply with the settlement terms.

unlawful, unfair or fraudulent”

Bonta’s office said Pong has agreed to settle the suit that alleges it contravened California laws on unfair competition and false advertising. According to the Associated Press, Pong acknowledged that some of its operations were “unlawful, unfair or fraudulent” as alleged in the complaint.

In a press release issued Thursday this week, Attorney General Bonta said: “Under the guise of lawful sweepstakes, Pong knowingly used casino-style games to prey upon vulnerable Californians. Today’s judgment puts a halt to these unlawful activities.”

Transgressing California law since 2015

Thursday’s judgment reveals that Pong provided gambling software to sweepstakes cafes throughout California. According to a release from Bonta’s office, Pong continued its illicit betting operations despite a 2015 California Supreme Court ruling declaring the use of sweepstakes gambling systems unlawful.

Sweepstakes cafes operate as mini-casinos, offering interactive gambling-oriented games on electronic devices. The games closely mimic the experience of playing regular slot and video poker machines, yet are devoid of the consumer protections commercial gaming operators must implement. California’s Department of Justice said the games predominantly target “vulnerable, low-income consumers.” It added that the cafes have become “synonymous with illegal local gambling dens operating under the guise of lawful promotional sweepstakes used to prey upon unsuspecting consumers.”

California filed a lawsuit against Pong in 2016 seeking to permanently halt the firm’s illicit activities in the state and introduce penalties for Pong’s manufacture, distribution, and use of illegal gambling devices. This included deceptive acts and practices linked to the marketing and licensing of the systems.

In response to the Superior Court Judge’s ultimate verdict, Los Angeles City Attorney Mike Feuer expressed pride in his office’s part in securing the “important result.” He added that “illegal gambling has an especially corrosive impact on low-income communities and undermines public safety in many neighborhoods.”

End of the California dream for Pong

Kern County District Attorney Cynthia J. Zimmer has made her opinions on Pong pretty plain. Zimmer said Pong has “flouted California law” for years. She asserted that the company “flooded our state with illegal gambling devices, profiting off of the harm done to some of our most vulnerable communities.”

Zimmer concluded that Thursday’s ruling will mosey Pong’s illegal gambling software on out of California, and urged other makers of illegal betting software to “take your business elsewhere.”

Attorney Mike Feuer also flagged up that his office filed criminal charges this month against the operators of “an alleged illegal casino in Hollywood.” The press release highlighted the American Gaming Association’s (AGA) 2013 estimation that the sweepstakes cafe industry earns over $10bn a year through unlawful gambling operations.

AGA said back in 2013 that “thousands of Internet sweepstakes cafes have sprung up in more than a dozen states …in total circumvention of state anti-gambling laws and gambling license requirements.” In May, a historic Texas undercover bust nabbed 100s of illegal gambling machines.

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