Men Running California Illegal Gambling Operation Face Up To 5 Years In Prison
In El Dorado County, California, a significant legal development has occurred as three individuals plead guilty for orchestrating an illegal gambling operation across various internet cafes. The defendants include two residents of El Dorado Hills and one individual from Utah, all linked to a business known as SweepsCoach.
Overview of the Case
According to the U.S. Department of Justice (DOJ), the trio—James Mecham, 57, from Orem, Utah; Kurt Stocks, 49; and Heidi Edwards, 58—were instrumental in establishing sweepstakes casinos within internet cafes. Between 2012 and 2017, they reportedly received approximately $14 million, with around $11 million derived from operations in California and Arizona.
Facing up to five years in prison alongside a potential $250,000 fine, the case emerged from a comprehensive investigation involving the IRS, FBI, California Franchise Tax Board, and the California Department of Justice Bureau of Gambling Control, in conjunction with the U.S. Attorney’s Office.
The Mechanics of SweepsCoach
SweepsCoach has been promoting its services since 2005, claiming to launch hundreds of sweepstakes internet cafes. A YouTube promotional video, dating back to 2010 and garnering over 8,000 views, features a spokesperson asserting that the company has "devised sweepstakes games to emulate poker, keno, and slot machines." Despite their insistence that "it may look like gambling, but it isn’t," the DOJ has reached a contrary conclusion.
In a pivotal moment for the industry, the California Bureau of Gambling Control issued an advisory in 2012 declaring that internet sweepstakes cafes function as illegal gambling operations under state law. This stance was solidified by a 2015 ruling from the California Supreme Court, which affirmed that these computerized sweepstakes games are effectively equivalent to slot machines and, therefore, illegal.
A Growing, Yet Controversial Industry
The 2018 white paper from the American Gaming Association revealed striking figures, estimating that internet sweepstakes cafes generate over $10 billion annually, with offerings that closely mimic traditional slot machines and video poker. Various states, including certain municipalities in Ohio, have initiated regulatory measures, requiring cafe operators to obtain licenses and undergo thorough background checks.
California’s Legal Landscape for Online Sweepstakes
In California, state law strictly prohibits any entry fees or purchase requirements for sweepstakes, mandating that operators provide a free-to-enter alternative to paid contests. Although scrutiny surrounds sweepstakes operators, legal proceedings recently favored one such operator, Stake. A California resident alleged that Stake was conducting illegal gambling activities, yet the judge determined the matter was not suitable for court, directing it towards private arbitration.
The Social and Promotional Gaming Association (SPGA) heralded this ruling, emphasizing the legality of free-to-play sweepstakes games. An SPGA spokesperson noted, "These games are enjoyed responsibly by millions of American adults, and no purchase is ever necessary to play or have a chance to win prizes."
Conclusion
While the three defendants face impending sentencing in October, this case underscores the ongoing complexities and ambiguities within the legal frameworks governing internet gambling operations. As regulatory environments continue to evolve, stakeholders in the gambling industry must navigate these changes attentively to ensure compliance and safeguard their businesses.
Author Profile
Adam Roarty is a seasoned writer specializing in the gambling industry. With five years of experience as a content creator and editor for prominent platforms such as Oddschecker, CoinTelegraph, and Gambling Industry News, Adam possesses deep insights into sports betting and online gambling trends. He focuses on emerging stories within the dynamic landscape of U.S. betting, covering topics like legislation changes and promotional gaming dynamics.
