Are We Likely To See A Decline In Sweepstakes?

Sweepstakes casinos are incredibly popular across the United States. They were designed for people who love to play casino games, without needing to use real money to enjoy the fun. They are a phenomenon that has been sweeping the country and is currently legal in most states. However, some legislators have taken a dim view that gambling laws do not cover them and are therefore not regulated in the same way. This is why they are so popular in states that do not allow gambling for real money.

Currently, only a handful of US states allow iGamers to gamble for real money at online casinos; however, millions of people across the country love to play online casino games. Therefore, social casinos sprang up where people could play with virtual currency, and the prizes were all for the glory. Friends could compete against each other for a place on the leaderboard, or you might play a social casino game from within a social media app and earn extra points for your game, as with all casino games, whether social, sweepstakes, or for real money, the emphasis is always on the entertainment factor.

Sweepstakes casinos give players the chance to play in a social casino environment, using virtual 'gold coins' but also have the extra element of being able to exchange virtual prizes for physical prizes and even cash! They are currently legal because they are regulated by a different set of rules and laws – those relating to sweepstakes rather than gambling. 

What makes them legal across the country (other than in Washington, Michigan, Idaho, and Nevada) is that they adhere to specific rules, which state:

• All prizes must be identifiable before entry
• Purchases do not increase your chance of winning
• Each sweepstakes must have a precise end date.

For something to be classed as gambling, there has to be a prize (a player is rewarded with something of value), an element of chance (winners are determined at random rather than through skill), and there must be 'consideration' (where players pay to enter). Sweepstakes casinos do not meet the consideration criteria as they provide players the opportunity to play for free. The free entry methods are often daily login bonuses where players are rewarded with vast sums of free virtual currency. While their popularity has been a bonus for sweepstakes, not everyone is happy with the situation. 

Unfortunately, despite their popularity (or maybe because of it), some states are trying to restrict residents' access to these sites or close them down altogether. In the case of Nevada and Michigan, this is almost certainly because they threatened their existing gambling revenues. Las Vegas has always been very resistant to any online gambling which takes players away from its state of the art land based casinos and iconic entertainment hub. Vegas is so much more than gambling, and its entire economy depends on people coming to have a good time and spend their dollars on accommodation, theatre tickets, food, and a complete entertainment package.  Michigan almost certainly cracked down because its online casino gambling market was only launched relatively recently. While it is booming and bringing in valuable revenue dollars, the authorities are keen to keep anything 'free' out of sight. The state claims the sites do not offer players the same levels of protection, but it should be noted that they are also concerned about $13 billion in lost taxes!

Image by iXimus from Pixabay

While there is unlikely to be a decline in the popularity of sweepstakes casinos, other states are likely to introduce legislation that will make them illegal. Restrictions are currently pending in New Jersey, New York, Montana, Connecticut, and Louisiana. While many of us think of California as a place where anything goes, the laid-back image does not apply to gambling.  While voters in the state rejected the legalization of online gambling in a recent, and bitterly disputed referendum, sweepstakes casinos have had excellent participation rates. Most people consider them to be a bit of innocent fun.

However, the Californian legislators have a different opinion. In late June, the California Senate Governmental Organization Committee advanced bill AB-831, and it looks like it will be fast-tracked to the Senate. Anti-sweepstakes casino sentiment seems to be picking up steam across the country, and a strikeout in California could come as a big blow. That battleground could prove decisive for this type of casino across the country. New York and New Jersey are awaiting their governors' signatures to enact the bans, but other states have initiated failed legislation. It is all hanging in the balance right now, and some regulators have initiated enforcement action against 'illegal' sweepstakes casino operators.

The crackdown on sweepstakes casinos is because the regulators believe they have been set up simply to get around gambling laws. They have been described as 'illicit gambling enterprises' and can operate outside the strict regulatory framework that covers land-based and state-sanctioned online wagering.  The irony is that just because something is prohibited does not make it go away. Many people in favor of sweepstakes casinos argue that they prevent players from turning to unregulated offshore real money and crypto sites. 

Traditional sweepstakes involve games of chance. Detractors claim that sweepstakes casinos do not fit the criteria that make sweepstakes legal. It is a very gray area, and there is bound to be a good deal of 'argy-bargy' before the matter is settled. The Mississippi Gaming Commission recently issued cease-and-desist letters to several online sportsbooks, iGaming sites, and sweepstakes casinos, describing them all as "online gambling sites" operating in violation of Mississippi gaming law. They failed to distinguish between sweeps and real money sites, lumping them all together as gambling sites. New York has taken similar action.

The irony is that as people love to play, they will find a way to continue playing. In the past, gambling prohibition pushed games underground and or into illegal gambling rings and backroom operations. The chances are that the current changes will simply move the sweepstakes casinos offshore. It is unlikely that the number of players will decline; in fact, being outside of state control might make them more attractive. Gambling regulation is always a delicate line to walk.