On Wednesday, a federal judge ordered Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk to face a lawsuit accusing him of running an illegal $1 million-a-day election giveaway during the 2024 presidential campaign.

Musk Faces Plausible Claims of Misleading Voters With Fake Lottery Scheme

U.S. District Judge Robert Pitman in Austin, Texas, ruled that plaintiff Jacqueline McAferty plausibly alleged Musk and his political action committee, America PAC, misled voters into believing they were entering a legitimate lottery, reported Reuters.

McAferty, an Arizona voter, claimed Musk induced people in seven battleground states to sign a petition supporting the U.S. Constitution with promises of million-dollar prizes.

She said participants were required to hand over names, addresses, emails and phone numbers, but had no real chance of winning.

In his defense, Musk argued that the payouts were not "prizes" but payments to individuals "selected to earn" money as PAC spokespeople.

Judge Pitman, however, cited Musk's own statements suggesting money could be "won," writing: "It is plausible that plaintiff justifiably relied on those statements to believe that defendants were objectively offering her the chance to enter a random lottery–even if that is not what they subjectively intended to do."

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Data Collection And Election Integrity

The court also rejected Musk's claim that voters were not harmed by providing contact details. Pitman noted that an expert in political data brokerage could testify to the monetary value of voter information, particularly in swing states.

Musk's Political Plans Shift

The ruling comes as Musk has reportedly shelved plans to launch a new "America Party." As per reports, Musk decided to step back from third-party ambitions to avoid alienating Republicans, particularly Vice President JD Vance, a potential successor to the MAGA movement.

While Musk had floated forming the party in July, sources say he is now focused on his companies, though he may revisit the idea before the midterms. President Donald Trump has previously defended Musk, calling him a "good person" and Vance has said he hopes Musk re-engages with the Republican camp.

Trump’s EV Tax Credit Rollback Threatens Tesla

Tesla may face new challenges as Trump rolls back the $7,500 federal electric vehicle tax credit and eases Corporate Average Fuel Economy standards -- changes that could further pressure the company amid declining global sales.

In a contrasting move, Trump signed an executive order to loosen space industry regulations, a decision that could provide a boost to Musk’s aerospace venture, SpaceX.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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