More States Consider Banning Sweepstakes Casinos
Sweepstakes and social casino gaming has become a multi-billion dollar industry over the last few years, but has faced some headwinds in recent months. Several states around the country have moved to make the platforms illegal.
Mississippi became one of the latest after the state senate approved SB 2510 in a 44-1 vote last week. The bill would ban social and sweepstakes casinos from operating in the state. Other states around the country are looking to follow suit.
Several States Consider Bans
Sweepstakes platforms offer casino-style gaming with players using virtual currency that has no cash value. Many also allow users to buy additional virtual currency that often includes a “sweeps” currency as a bonus. The sweeps currency can also be used and allows players to win real cash and prizes.
Critics argue that the sites are basically online gambling and circumvent gaming laws. The Michigan Gaming Control Board has been especially vigilant in trying to root out these types of operators in the state.
“The Michigan Gaming Control Board firmly believes in a regulated and safe gaming environment,” MGCB executive director Henry Williams said in October. “Illegal gambling is not tolerated in Michigan, and we will take all necessary actions to protect our residents from such unlawful practices.”
Other states are considering bans. New York state Sen. Joseph Addabbo introduced legislation in January that would legalize online gaming. He also planned to introduce a bill that would bar sweepstakes casinos from operating in the state.
“By addressing the sweepstakes casinos issue and allowing a regulated iGaming casino option, we are demonstrating our commitment to protecting New Yorkers, dealing with gaming addiction, while adding tax revenue beneficial to all state residents,” he noted in a statement.
In New Jersey, Assemblyman Clinton Calabrese has proposed to regulate the gaming sites as the state does regulated online gaming operators. Bill A5196 would treat the sites more as traditional online gaming in the Garden State.
Maryland Sen. Paul Corderman proposed a ban on the platforms in January and SB860 is currently under consideration by the Senate Budget and Taxation Committee.
Connecticut legislators recently filed Bill 1235 that would ban the online casinos in the state and makes it a Class D felony to play on the platforms.
The casinos are now illegal in Washington and some operators have already moved out of Nevada.
Not only have sweepstakes casinos faced potential bans, but numerous lawsuits have been filed against operators across the country. Last week, a federal jury ordered High 5 Casino to pay $25 million in damages to players who say that they lost money on the platform.
Last year, the American Gaming Association (AGA) urged lawmakers to crack down on the industry.
“Where state laws and regulations are not clear, legislatures should consider enacting legislation to prevent unlicensed operators from exploiting loopholes in sweepstakes regulations to offer online real money gambling,” the casino industry trade group noted in a statement.
Companies Defend Industry
Operators have defended the industry, arguing that they use a sweepstakes model that doesn’t involve real currency. They argue that users can play for free and that the platforms are more akin to traditional mobile gaming. Operators also argue that players have no reasonable expectation of winning prizes.
The Social and Promotional Gaming Association (SPGA) represents the industry and noted in December that the group has enacted a code of conduct that includes age verification, proper identity verification and Know Your Customer (KYC) procedures, location verification, and anti-money laundering policies.
The group has even embraced regulation in New Jersey and believe this may be a positive move for the industry.
“The SPGA welcomes Assemblyman Calabrese’s bill,” the group noted on Jan. 16. “The SPGA and its members are advocates for clear regulations that enable transparent, innovative and responsible social and promotional gaming experiences.”
“The bill aligns with our core objective of reinforcing the well-established legality and legitimacy of social sweepstakes games, which millions of American adults enjoy.”
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