Gaming Trade Group Encourages Regulators to Crack Down on Internet Sweepstakes
The American Gaming Association (AGA), the leading trade organization representing the commercial and tribal gaming sectors in Congress and nationwide, states that online sweepstakes require increased regulatory oversight.
The term "sweepstakes casinos" refers to online platforms and applications that provide classic slot machines and table games. The platforms bypass state and federal gaming regulations by employing a dual-currency model.
New players are given a complimentary allocation of virtual coins that can be utilized to participate in the casino games. When the free play ends, players have the option to buy an additional virtual currency to enhance their gaming experience.
Generally, online sweepstakes casinos permit the redemption of only one currency for prizes or cash. These operators assert they are not promoting gambling since players do not have to purchase anything in advance to take part.
Online sweepstakes casinos are facing regulatory scrutiny, as state officials in Michigan, Georgia, and Delaware recently issued cease-and-desist letters to multiple operators.
AGA Emphasizes the Importance of Regulatory Oversight
In a memo about sweepstakes released this month, the AGA stated that online sweepstakes casinos weaken gaming regulations and endanger consumers. The gaming lobby is calling on state regulators to issue warning notices to sweeps operators, alerting them that they will face legal consequences if they do not promptly cease their US-focused activities.
“There are an increasing number of entities that have intentionally designed business models to circumvent or exploit ambiguity in state gambling laws and the regulatory frameworks within which the legal gaming industry operates,” the AGA memo read.
"Gaming regulators and state attorneys general should investigate companies or platforms that offer casino games or a form of sports betting under the ‘sweepstakes’ model to determine whether or not these operators are in compliance with their respective laws and regulations and take appropriate action if not. 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 memo continued.
The AGA states that online sweepstakes casinos are distinct from social gaming apps because the former allows players a chance to win money.
“Unlike sweepstakes casinos, which utilize a dual currency system to offer players the chance to exchange the in-game currency for real money and prizes, social casino games are more casual games that resemble gambling style games but have a closed loop economy where rewards cannot be redeemed for real-world currency, used to win prizes, or traded to other players,” the AGA said.
Michigan Eliminates Sweepstakes
Near the conclusion of 2023, the Michigan Gaming Control Board dispatched cease-and-desist notifications to two prominent sweepstakes casino operators, Cyprus-based Stake.us and San Francisco-based Virtual Gaming Worlds (VGW), operator of Luckyland Casino, Chumba Casino, and Global Poker.
The regulator instructed the companies to promptly remove their games from Michigan. The board stated that the sweepstakes casinos breached the state’s Lawful Internet Gaming Act, Lawful Sports Betting Act, and Michigan Gaming Control and Revenue Act. The sweep operators were informed they could face legal repercussions according to the Michigan Penal Code.
Consequently, due to the communications, both Stake and VGW ceased providing their products in Michigan. This week, reports indicated that Delaware has initiated comparable measures against VGW, which is also facing a lawsuit in Georgia for illegal operations.
