AGA Calls Out State Regulators to Investigate Sweepstakes Model
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The American Gaming Association is urging regulators to take into account a new form of potentially unregulated gaming that is popping up throughout the country.
The AGA has been circulating a memo, “Regulatory vigilance critical to ensure ‘Sweepstakes’ don’t threaten consumers and undermine gaming regulation,” throughout the industry to urge that regulators ensure entities that offer gaming through a “sweepstakes” model do so within legal and regulatory frameworks.
“In the online space, some unlicensed casinos and sportsbooks are thriving by employing a ‘sweepstakes-based’ model to potentially skirt gaming laws and regulations. As a result, consumers are being deprived of protections and states are forgoing significant tax and revenue opportunities as this gambling replaces that conducted through regulated channels,” AGA representatives wrote in the memo.
What is the Sweepstakes Model?
Sweepstakes is a new form of gaming being offered online in which players engage in traditional online casino games such as slots, roulette, blackjack, in which players play for free or buy virtual currency to ostensibly play for real money.
Customers can buy “coins” to fund gameplay and in turn receive “sweep coins” through promotions, welcome bonuses, daily log-in rewards, and other types of activities. These types of “sweep coins” can be turned in for cash or prizes, and require an investment of time from the user and gameplay, according to the AGA.
“Sweepstakes casinos claim that because they don’t require real money for their gameplay, they are not offering gambling under the letter of the law. However, functionally, sweepstakes casinos look and play like an online casino while using a dual-currency system to avoid licensing and regulation,” the AGA representatives note in their memo.
These games are typically unregulated, unlicensed, and offer little in the way of responsible gaming services for their users.
The AGA is now urging state regulators to determine “whether or not these operators are in compliance” with state laws and take action against the games 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.”
Michigan Regulators Already Investigating
The Michigan Gaming Control Board (MGCB) has actively began investigating the sweepstakes model, sending cease-and-desist letter to two companies offering services under the model. In November and December of 2023, the control board sent notices to Cyprus-based Sweepstakes Limited (Stake.us) and San Francisco-based VGW Luckyland, whose parent company, VGW Holdings, is headquartered in Australia.
Both companies have stopped offering the games in the state.
The MGCB noted that the companies were in violation of the Lawful Internet Gaming Act, the Michigan Gaming Control and Revenue Act, and the Michigan Penal Code.
Robert Linnehan
Covering regulatory developments in online gambling. Editing/writing/creating a newsletter for readers across all formats.
