Capital Sweepstakes Systems and the president who fixed the games
Capital Sweepstakes Systems Inc., a Loomis, California corporation, and its president Kevin Freels pleaded guilty in July 2015 to conducting an illegal gambling business built around internet sweepstakes cafes across California. Court documents revealed the sweepstakes results were not left to chance at all; they were predetermined by the company's own software. Capital Sweepstakes forfeited more than $1.5 million in profits that had already been seized.
- Year
- 2015
- Where
- United States
- Outcome
- Convicted
- Reported loss
- $1.5 million
- Victims
- Not stated in the sources
- Schemes
- Sweepstakes casino scams
- Last reviewed
- 2026-10-10
The facts, as recorded
- Capital Sweepstakes Systems Inc., headquartered in Loomis, California, and Kevin Freels, 41, of Loomis, pleaded guilty on July 30, 2015 to conducting an illegal gambling business.
- Freels was president of the software company that provided the sweepstakes software and had an office at Capital Sweepstakes headquarters; he received a significant share of the revenue and helped oversee operations and finances.
- From January 2013 to September 2014, Capital Sweepstakes provided the software and hardware systems that powered internet sweepstakes cafes throughout California, including in Sacramento, West Sacramento and Stockton.
- Customers purchased sweepstakes entries loaded onto magnetic-strip cards, then swiped them at terminals to play casino-style games with names including Hot Luck Keno, Tropical Treasures, Dreamcatcher, Lucky Puppy and Luck of the Irish.
- According to the plea, the sweepstakes results were not actually dependent on the outcome of the games; they were predetermined through Capital Sweepstakes's own software, which tracked activity remotely and invoiced each location for its agreed share of profits.
- Capital Sweepstakes agreed to forfeit over $1.5 million in profits, funds that had already been seized by the United States in a related proceeding.
- US Attorney Benjamin B. Wagner said the pleas were "the result of Capital Sweepstakes' attempt to avoid" gambling laws "while building a sprawling and lucrative enterprise based upon a purported sweepstakes game that was in fact the functional equivalent of a slot machine."
- California Attorney General Kamala D. Harris said the operation "profited by targeting low-income communities, misrepresenting their unregulated slot-machine style operations as legal enterprises."
Why this case matters
This is the clearest documented instance on this site of a “sweepstakes” crossing the line not just into unlicensed gambling, but into a rigged game. Most sweepstakes-cafe prosecutions turn on whether the dual-currency structure amounts to illegal gambling at all. This one did not need to reach that argument: prosecutors said the outcomes were decided by software before the customer ever touched the screen, which is fraud on top of whatever the licensing question resolves to.
A statewide network run from one office
Capital Sweepstakes was not a single storefront; it was the backend provider for internet sweepstakes cafes across multiple California cities, tracking every terminal’s activity remotely and invoicing each location for its cut. Freels, as president of the software side of the business, sat at the centre of that network rather than running any one location.
The caveat
Both Capital Sweepstakes Systems Inc. and Kevin Freels pleaded guilty to conducting an illegal gambling business; this is a conviction, not merely a charge. The forfeiture of $1.5 million was agreed as part of the plea and covers funds already seized before the plea was entered. The publicly available record of this case does not show a separate prison sentence imposed on Freels individually; this page will be updated if one is documented.
Sources
- Loomis Man and Corporation Plead Guilty to Conducting an Illegal Gambling Business. US Attorney's Office, Eastern District of California. Accessed 2026-10-10. Supports: All defendant names, the operating period, the forfeiture amount, the predetermined-results finding, and the Wagner, Miller and Harris quotes.