A New York Supreme Court judge has dismissed a lawsuit filed by SCPS, LLC and SSPS, LLC against Kind Law and Ben Travis Law. The ruling, made on March 31, 2026, affects the online gaming industry and arbitration practices, particularly for companies operating in the virtual casino space.
The court's decision came after SCPS and SSPS, which operate online gaming websites, accused the defendants of malicious prosecution and tortious interference. The plaintiffs claimed that the defendants had filed numerous arbitration demands on behalf of users without proper authorization. This case highlights the ongoing legal battles surrounding online gaming and the complexities of arbitration agreements.
Background
SCPS, LLC, also known as Zula, and SSPS, LLC, known as Sportzino, are companies that run online gaming platforms where users can earn virtual currency, referred to as gold coins. Users receive these coins for free upon registration and can purchase more if desired. However, the coins cannot be exchanged for cash or real-world prizes, which has raised questions about the legality of such operations.
The dispute began when Kind Law and Ben Travis Law started advertising on social media, encouraging users to file claims against various online gaming operators, including Zula and Sportzino. The advertisements led to thousands of individuals signing declarations claiming they had spent money on the plaintiffs' platforms and authorized the defendants to seek recovery on their behalf. This prompted a series of arbitration demands filed by the defendants against the plaintiffs.
As the situation escalated, SCPS and SSPS filed a complaint in the United States District Court for the District of Columbia, seeking an injunction against the arbitration claims. However, the court dismissed the case, stating there was no personal jurisdiction over the defendants. Following this, the plaintiffs attempted to sue again in California but eventually discontinued their claims against the defendants.
The Ruling
In the recent ruling, Judge Phaedra F. Perry-Bond granted the defendants' motion to dismiss the plaintiffs' complaint. The court found that the claims of malicious prosecution and tortious interference lacked a substantial basis. The judge noted, "The speech targeted by this lawsuit falls within Civil Rights Law § 76-a's ambit and therefore CPLR 3211(g) applies."
The court emphasized that the malicious prosecution claim was invalid under California law, which prohibits such claims arising from contractually agreed-upon arbitration. Additionally, the court stated that the plaintiffs failed to demonstrate malice in the defendants' actions, which is required for a tortious interference claim. As a result, the court dismissed the complaint and ordered the defendants to submit a fee application.
Impact
This ruling has significant implications for online gaming companies and their legal strategies. It reinforces the importance of arbitration agreements and the challenges that plaintiffs face when attempting to contest arbitration demands. The court's decision also highlights the legal protections afforded to defendants under anti-SLAPP laws, which aim to prevent lawsuits that target free speech and public participation.
Furthermore, the ruling may deter similar lawsuits from other online gaming operators who might consider challenging arbitration claims filed against them. It establishes a precedent that claims of malicious prosecution arising from arbitration may not hold up in court, especially if the arbitration was initiated under a contractual agreement.
What's Next
The plaintiffs have the option to appeal the court's decision, but it remains to be seen whether they will pursue that route. The outcome of this case may influence future litigation involving online gaming and arbitration practices.