Gambling software provider settles with California over alleged illegal gaming

By Shaun Zinck | Aug 6, 2015

California Attorney General Kamala Harris said Friday that Capital Sweepstakes Systems will pay $700,000 in penalties for allegedly targeting low income communities with illegal slot machine gaming.   Shutterstock

SACRAMENTO, Calif. (Legal Newsline) - A California sweepstakes gambling software provider will pay $700,000 in penalties to the state for allegedly violating state gambling laws, said California Attorney General Kamala Harris on Friday.

Capital Sweepstakes Systems allegedly governed illegal gambling and unfair competition. Under the settlement with the state, the company is prohibited from conducting any sweepstakes operations for the next 10 years.

“Capital Sweepstakes profited by targeting low-income communities, misrepresenting their slot-machine style operations as legal enterprises and creating magnets for crime,” Harris said. “My office is dedicated to combatting and dismantling illegal and unregulated gambling operations statewide. I thank our Gambling Task Force and the Bureau of Gambling Control for their tireless investigative work.”

The Federal Bureau of Investigation conducted an investigation into Capital Sweepstakes along with the California Department of Justice's Bureau of Gambling Control. More than $3 million was seized in cash and accounts during the investigation, Harris said.

Co-defendant in the case Kevin Freels agreed to pay $1.6 million to the federal government after he pleaded guilty to federal felony gambling charges, Harris said. The forfeiture is in addition to the $700,000 in civil penalties for $2.3 million in penalties and forfeitures. Harris added sweepstakes gambling is a problem nationwide with an estimated $10 billion earned every year.

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