Merced County has joined a lawsuit filed by the state of California against a Canadian firm that supplies gambling software to so-called “sweepstakes cafes” that have been found to be illegal, authorities announced Friday.
District Attorney Larry Morse II said the county was one of several joining the California lawsuit against Pong Marketing and Promotions, based in Woodbridge, Ontario. A phone message left with the company after business hours was not immediately returned.
The suit, filed in Solano County Superior Court, seeks injunctive relief and penalties of approximately $10 million, authorities said in a news release.
Pong Marketing provides software to sweepstakes cafes throughout California and recently changed its software gambling system to a supposed skill-based model, abandoning its sweepstakes model, according to a statement.
Nonetheless, these cafes operate as mini-casinos, offering interactive gambling-themed games on computer gambling devices, which they market to a predominantly vulnerable, low-income clientele, according to a statement from Attorney General Kamala Harris’ office.
The California Supreme Court has ruled that these machines are illegal gambling devices in violation of sections of both the California Penal Code and Business & Professional Code, according to Harris’ statement.
"The software providers know that they are producing illegal gambling games that are being used in local internet cafes. These illegal gambling operations create a public safety threat to our community," Morse said in a statement. "We have partnered up with the Attorney General and several other counties throughout the state to combat and eliminate this recent scourge of illegal gambling."
At least one such cafe known to operate in Merced County, Inter Connect, was raided about two years ago, according to the District Attorney’s Office. The business was operated by Kamal Kenny Nasser, who was one of the defendants found in a 2014 Kern County decision to have operated unlawful slot machines.
Sweepstakes gambling enterprises are a major problem nationwide, estimated to earn over $10 billion a year, according to the District Attorney’s statement.
The District Attorney's office, as part of the Sweepstakes Task Force, is using the State's Unfair Competition Law to provide a strong monetary remedy against the software providers.
Editor’s Note: This story was updated on June 10, 2016, to clarify that the interpretation of the California Supreme Court ruling was attributed to state Attorney General Kamala Harris.