Minnesota: Federal judge rejects Stake.us arbitration bid in proposed class action

A proposed class-action lawsuit accusing Stake.us of operating an illegal online gambling platform in Minnesota will proceed in federal court after a judge denied the company’s motion to compel arbitration.

The complaint asserts five causes of action on behalf of plaintiff Chris Wolters and a proposed class of similarly situated Minnesota users. Wolters is seeking to recover gambling losses under Minnesota Statutes Section 541.20 and alleges violations of the Minnesota Consumer Fraud Act, the Minnesota Deceptive Trade Practices Act, and the Minnesota False Statement in Advertising Law. The lawsuit also includes an unjust enrichment claim.

Wolters filed the lawsuit in August 2025, alleging that Stake.us unlawfully operated an online gambling platform in Minnesota, misrepresented the legality of its services to state residents, and retained money consumers lost through the alleged gambling activity. He used the platform from April 2023 to February 2025, lost more than $80,000, and subsequently entered treatment for gambling addiction.

According to the complaint, Stake.us functions as a real-money internet casino by allowing users to purchase two virtual currencies, Gold Coins and Stake Cash. Players can wager the currencies on casino-style games, win Stake Cash, and redeem it for cryptocurrency that can later be converted into U.S. dollars.

Stake.us sought to move the dispute out of court by arguing that Wolters accepted its online terms and conditions when registering his account. The terms contain an arbitration provision covering disputes about the existence, validity, enforceability, or termination of the agreement.

To support its position, Stake.us submitted a declaration from its founder stating that users were required to accept the terms and conditions before opening an account. The company also provided an internal screenshot that it said was associated with Wolters’s account.

U.S. District Judge John Tunheim found that Stake.us had not demonstrated the existence of a valid arbitration agreement. The court said Minnesota law generally treats contracts entered into in violation of statutes regulating conduct and protecting the public as void rather than merely unenforceable.

The court noted that the complaint alleges Stake.us constitutes an illegal gambling operation under Minnesota law. Stake.us did not meaningfully address the substance of those allegations in its arbitration briefing, instead arguing that the legality of its operations should be determined later in the proceedings.

“[I]f Stake’s Terms and Conditions are a contract entered into in violation of Minnesota’s gambling statutes, the Court must treat that contract as invalid and nonexistent,” wrote U.S. District Judge John Tunheim. “Wolters has alleged facts demonstrating that Stake’s Terms and Conditions are an illegal gambling operation, and Stake has not yet presented any evidence to the contrary.”

The court also determined that the arbitration clause expressly depended on the parties’ agreement to the terms and conditions. It found that the clause could not be separated and enforced independently if the underlying contract was void under Minnesota law.

Separately, the court held that Stake.us had not established that Wolters personally agreed to the arbitration provision. The screenshot submitted by the company did not identify Wolters by name or otherwise show that he had accepted the agreement. The evidence was therefore insufficient to establish contract formation by a preponderance of the evidence.

The court said that even if it had rejected Wolters’s argument that the contract was invalid because of the alleged illegal gambling activity, a limited trial would still be required to determine whether an agreement between the parties had been formed before arbitration could be ordered.

“We are pleased with the Court’s decision and look forward to litigating this case on behalf of our client and all of the other Minnesotans who have been impacted by Stake.us’ illegal gambling website,” plaintiff’s attorney Vildan A. Teske said in an email to Minnesota Lawyer.

Stake.us has faced additional lawsuits in other parts of the United States, including an action filed in Los Angeles against Stake.us, streaming service Kick, and gaming suppliers.