The Australian founders of the online betting site Stake.com are facing a lawsuit in the United States claiming 400 million dollars (401 million euros) in damages for a former partner.
Christopher Freeman filed a civil lawsuit in the Southern District of New York seeking punitive damages and payment for his initial investment in a precursor company to Stake.com. The lawsuit alleges that Freeman was misled by the two founders of Stake.com and, as a result, was barred from forming the new company. Stake.com was also targeted by the lawsuit.
Stake.com founders Ed Craven and Bijan Tehrani dismissed the lawsuit, telling local press it was “provably bogus”.
Freeman, a childhood friend of Tehrani, claims that they both started an online casino business called Primedice in 2013 while at university. Freeman claims he held a 20% stake in Primedice while Tehrani and Craven each held 40% each. The lawsuit claims that within nine months of Primedice’s inception, its shares were reduced to 14%. This was done to reward other senior members of the development team. In Freeman’s view, this share transfer was a violation of the original agreement that Primedice would only provide equity to other investors beyond the original three founders.
Freeman then claims that although he suggested the idea of starting a cryptocurrency casino, the Tehranis and Craven talked him out of making an initial investment in Stake.com and was told he might invest in a later date. He also alleges that he was told that the new company would not accept cryptocurrencies.
Court documents state:
“Freeman, who was committed and comfortable with online gambling concepts, thought a fiat currency casino was the wrong direction to go (fiat currency-facilitated online gambling is big, widespread business).
He felt it was very competitive and presented personal risks that he was not prepared to accept, and he did not want to be forced to move to Australia to pursue a fiat-based gambling business”.
The documents also allege that despite the assurances given, Freeman’s system privileges to Primedice were revoked.
“Later, when Stake.com was launched as a virtual casino that included a competing online dice game and many other features that Freeman had come up with and helped design, Tehrani and Craven affirmatively tried to allay the consternation of Freeman being misled into claiming that he still retained his stake in Primedice Eventually, Freeman’s access to the Primedice account was blocked and never returned.
In a statement released to the Australian press, the company said:
“The complaint filed by Chris Freeman contains allegations that are internally inconsistent, intentionally misleading and patently false. This amounts to a desperate attempt to spread false information.
Since its launch in 2017, Stake.com has grown into a global brand. It has sponsored English football teams Everton and Watford and also counts Drake as its main brand ambassador. It is estimated that the company is now worth around 1 billion dollars (1 billion euros).