Canadian gaming company agreed to pay the state of California $ 3.5 million and shut down all statewide operations after it was discovered that it had been gambling illegal in casino-style “contest cafes”.

Pong Game Studios Corp. For years has been supplying software to these cafes, which are short of gas stations, convenience stores, and other establishments in more than a dozen states, including California. The games they provided, namely internet slots and poker variations, offered prizes to be won, including cash, once the user had paid to play. Raffle cafes are illegal under California law as the gaming software offered on raffle systems constitutes illegal play.

A 2015 California Supreme Court ruling made the raffles illegal by calling it illegal gambling, but they continued to exist in California through game makers saying they were selling a product, such as phone cards. prepaid or cell phones, in stores that simply included sweepstakes. entries for customers to play casino style games and win prizes. Pong was among the companies that continued to sell the systems against the law, contributing to what the American Gaming Association lists as a $ 10 billion-a-year industry.

In 2016, the California Department of Justice, along with the 9 County District Attorney’s Offices and the Los Angeles City Attorney’s Office, got together and filed a complaint, known as People of the State of California v Pong Marketing and Promotions Inc., for violating the California Unfair Competition Law and the Deceptive Advertising Law.

California finally won the long-contested Solano County Superior Court trial on Thursday. In addition to the fact that Pong must shut down all state operations and pay California $ 3.5 million in civil penalties, costs, and attorney fees, the company must waive all of its rights to the claims. seized assets listed in the lawsuit, with the California Department of Justice authorized to destroy all such equipment.

Pong isn’t completely out of the woods either, as the company could also face paying up to $ 15 million in additional fines if it doesn’t comply with the state on time.

Although the company has not commented on the case after Thursday’s ruling, Pong admitted that some of its operations in California were “illegal, unfair or fraudulent” in the settlement.

Important illegal gambling decision in California

Attorney General Rob Bonta, whose office was the main force behind the trial, noted in a statement Thursday that the trial was a blow to illegal gambling in California.

“Under the guise of legal raffles, Pong knowingly used casino-type games to prey on vulnerable Californians,” Attorney General Bonta said Thursday. “Today’s judgment puts an end to these illegal activities. It protects consumers and it protects the safety of our communities. I am grateful to our task force partners across the state for their work in securing this important victory. Together, we can continue to dismantle illegal gambling operations and make a difference for the people of our state. “

Other city and county leaders shared the same sentiment after the decisions were announced.

Los Angeles City Attorney Mike Feuer (Photo: Twitter)

“I am proud of the role of my office in achieving this important result. Illegal gambling has a particularly corrosive impact on low-income communities and compromises public safety in many neighborhoods, ”Los Angeles City Attorney Mike Feuer noted Thursday. “Our work to tackle this huge problem continues. This month my office filed criminal charges against the operators of an alleged illegal casino in Hollywood. “

“For years, Pong has flouted California law and inundated our state with illegal gambling devices, profiting from the damage done to some of our most vulnerable communities,” added Kern County District Attorney Cynthia J. Zimmer. “Illegal Pong devices and software have spawned unregulated pop-up casinos that have been magnets for criminal activity wherever they have occurred, and today’s judgment will bring out illegal Pong gaming software.” of our state and send a clear message to other manufacturers of illegal gaming software. : take your things elsewhere.

Legal experts noted that the successful action against Pong could inspire further cases against similar companies and operations in the near future.

“It’s hard to argue too much against what California has done here,” attorney Matt Holcomb, a California attorney who has been involved in cases involving gambling issues, told The Globe on Friday. “It was illegal, the company said so in the regulations, and it ended up costing taxpayers nothing because the company paid millions of dollars. And more illegal gambling venues have disappeared.

“All the other places that do are now basically on notice. California shot them down and persisted in doing so for over half a decade. They don’t give up easily, and other similar game companies and raffle cafe operators must be nervous by now. “

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