Michigan Regulators Cracking Down on Unlicensed Online Lottery
The Michigan Gaming Control Board continues to take a long, hard look at unlicensed lottery and sweepstakes offerings in its state, announcing today that it has issued a cease-and-desist letter to OC Media Holdings LLC.
OC Media Holdings LLC, operating at One Country Give (One Country), based in Fayetteville, Arkansas, has been generating income through monthly membership sales, offering participants entries into various “sweepstakes” advertised on their website and social media platforms.
The sweepstakes are unlicensed online lotteries and/or raffles under Michigan law, according to the control board.
No Tolerance for Unlicensed Gaming
The Michigan Gaming Control Board (MGCB) has turned its regulatory eye to sweepstakes games in the state. The agency conducted an investigation of One Country’s activities after receiving a tip about the company’s operations and business model being available to Michigan users.
“The Michigan Gaming Control Board will not, and does not, tolerate activities that circumvent our laws and threaten the integrity of the highly regulated gaming industry in Michigan,” MGCB Executive Director Henry Williams said in a release. “We are committed to upholding state law to ensure a fair and honest gaming environment for all Michigan citizens, and we will keep issuing cease-and-desist letters and taking appropriate legal actions to halt illegal gaming in the state of Michigan.”
One Country operated multiple sweepstakes concurrently, with four different membership levels for customers:
• 300 entries each month for $15 per month
• 900 entries each month for $25 per month
• 3,750 entries each month for $50 per month
• 6,000 entries each month for $75 per month
Users could purchase entries through one-time payments or through the purchase of merchandise, according to the MGCB.
The company has 14 days to cease operations after receiving the notice. It must take steps to prevent Michigan residents from gambling on its websites and social media platforms.
The MGCB has actively began investigating the sweepstakes model, previously 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.
American Gaming Association Warned Against Sweepstakes
The notice comes just a week after the American Gaming Association urged state regulators to look into companies offering unlicensed sweepstakes and lotteries in their markets.
The AGA circulated 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.
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.
Robert Linnehan
Covering regulatory developments in online gambling. Editing/writing/creating a newsletter for readers across all formats.
