Fliff, a “social sportsbook” available in 49 states, is under legal fire for allegedly masking online sports betting as a free-to-play sweepstakes in the Golden State.
The class action complaint filed with the U.S. District Court for the Central District of California alleges Fliff “free-to-play” sweepstakes players stand to win nothing of monetary value unless they deposit real money, violating multiple state and federal gambling laws.
The plaintiff, Bishoy Neshim, claims he lost over $7,000 using the app. He seeks more than $5 million in damages for himself and those similarly affected by what he claims is an illegal online sportsbook.
Lawsuit: Fliff really sports betting
California is one of 45 states where Fliff users can withdraw real money from “sweepstakes” contests that resemble the lines on different sporting events on apps like DraftKings and FanDuel.
“Social sports betting, like social casino, is different from gambling, and is a play-for-fun form of entertainment. In lieu of traditional bonuses, we use sweepstakes as a promotional tool that allows our customers to play and win gift cards and cash prizes,” an “Is Fliff Legal?” FAQ says on its website.
Complaint disagrees with legality
The complaint calls Fliff’s “sweepstakes” model a “lure” that reels customers in with free “Fliff Coins” and then baits them into playing with real money (“Fliff Cash”) that can be withdrawn at a 1:1 dollar ratio to a bank account. Users can win virtual currency convertible into money or prizes for free, but they can also directly deposit money to do so.
“Fliff gives every user, regardless of local, state, or federal law, the option to bet with “Fliff Cash” which has a dollar- for-dollar equivalence to actual money and that can be withdrawn and wired directly to the users’ bank accounts. That’s the epitome of an online sports book,” the complaint says.
It notes that Californians voted against legalizing sports betting in November 2022 and thus, wagering on the result of any sporting events is illegal. It asserts that Fliff does not satisfy the state’s definition of a “sweepstakes” because it does not distribute prizes “by lot or chance.”
In addition to monetary relief, it seeks an injunction to stop Fliff from offering its contests across state lines, an alleged violation of the federal Wire Act.
Fliff stops taking money in Ohio
Fliff faces potential legal consequences in Ohio as well, where sports betting is legal but regulators are cracking down on unregistered sportsbooks and daily fantasy sports apps.
It stopped taking deposits in Ohio since LSR reported a probe into potentially unregistered sports betting and fantasy sports websites.
As of June 1, Ohio is among several states where users can only earn Fliff Cash if their account balance hits zero or through a “no-cost giveaway” on social media, according to the company website. Users in these states are prohibited from earning Fliff Cash through real money purchases or by sending a hand-addressed envelope to a P.O. box in Austin, Texas asking for credits:
- Alabama
- Georgia
- Iowa
- Indiana
- Kentucky
- Louisiana
- Michigan
- Minnesota
- Mississippi
- Ohio
- South Carolina
Action needed by the end of June
Fliff has until June 28 to respond to the complaint or it could face court action.
Austin-based co-founder Matt Ricci did not respond to a request for comment.
Bishoy is represented by Dennis Stweart, a former antitrust attorney with the U.S. Department of Justice.
