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As district court Judge Sunshine S. Sykes ruled on Jan. 5, a California sports betting lawsuit against social sportsbook Fliff will be settled by arbitration. Not only was it a victory for Fliff, but other gambling companies as well.
A player, Bishoy Nessim, is asking for $7 million in a class action lawsuit accusing Fliff of operating an illegal online sportsbook.
The social sportsbook seeks players in states without legal, regulated sports betting, including California. Sykes agreed with Fliff’s statement that players waive the right to settle disputes in court when they agree to the company’s terms and conditions.
Fliff social sportsbook lawsuit dates back to June 2023
When creating his Fliff account in December 2022, Nessim navigated his account creation page and clicked a checkbox following the statement: “I accept the Terms of Use and Sweepstakes Rules of Fliff Inc.”
Nessim filed this putative class action against Fliff in June 2023, alleging a violation of California’s Unfair Competition Law and an unjust enrichment claim. The player claims that Fliff operates an illegal online sportsbook and that Fliff’s conduct in running its service constitutes unlawful and unfair business acts.
In August, Fliff’s lawyers filed the pending motion based on the alleged arbitration agreement within Fliff’s Sweepstakes Rules. The sportsbook’s lawyers asked California’s federal court judge to dismiss a class action lawsuit and compel the matter to arbitration individually.
A hearing on the motion to compel arbitration was set for Sept. 29.
The case now goes to third-party arbitration. It will rely on a neutral arbitrator to run over a private process where both parties present their evidence.
A subject of the state authority
Nessim insists California law should apply because the sweepstakes app caters to Californians. According to the Fliff arbitration order, Nessim said:
“Pennsylvania law is contrary to a fundamental California policy because Pennsylvania law permits mobile and online sports betting, while California statutes and the California Constitution forbid such activities.”
Fliff said its sweepstakes rules adhere to gambling law in Pennsylvania because that’s the principal place of the company’s business. Fliff clarified that, while Texas may be a place where its headquarters are today, Pennsylvania was its headquarters at the time of contract formation.
Sykes concluded that Fliff provided sufficient evidence that Pennsylvania is its “principal place of business,” at least “at the time of contracting.”
In response, Fliff emphasizes there is no “material policy difference” between California and Pennsylvania as they both ban “unlicensed online sports book operations.”
How does Fliff work?
Fliff has a similar look and offers game odds like any other sports betting platform. Since Fliff is not a real-money sportsbook, it is not regulated by the same laws as reputable sportsbooks like BetMGM, Caesars, DraftKings, or FanDuel.
The only states where the sportsbook is unavailable are Hawaii, Idaho, Nevada, Tennessee and Washington.
According to Fliff’s website, players deposit money in exchange for Fliff Cash to place bets or receive Fliff Coins. Players can change their game mode within the games section between playing with Fliff Coins and Fliff Cash.
Players can use Fliff Coins for social gameplay at the sportsbook, and to earn loyalty points. But they cannot redeem them for cash as they have no monetary value.
However, Fliff Cash is redeemable for cash prizes or gift cards. Once players reach at least $50 in their Fliff Cash accounts, they can withdraw it at a 1:1 rate for cash.
