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Connecticut regulators have suspended the online gaming supplier license of High 5 Games due to its sweepstakes casino offering, and said that the company will face criminal charges.
The company supplies hundreds of slot games to multiple regulated online casino operators in Connecticut and other U.S. states, but also operates a sweepstakes casino gaming platform through its High 5 Casino subsidiary.
Last month, High 5 Casino updated its terms of use to exclude sweepstakes players from states that offer regulated online casino gaming, including Connecticut, with that update taking full effect on Friday (March 14).
However, the Connecticut Department of Consumer Protection (DCP) Gaming Division on Friday issued a summary suspension of the company’s license as an online gaming service provider with immediate effect, based on a High 5 Casino subsidiary operating an “unlicensed online casino”.
In a statement, the DCP also said that the company will be charged with 1,065 criminal counts of conducting illegal gaming activity, which is a Class A misdemeanor that carries a penalty of up to one year in jail and a fine of up to $2,000.
State investigators found that 1,065 Connecticut players made about $3.1m in purchases on the High 5 Casino sweepstakes platform, with 911 of those players losing about $937,000. In addition, the state found that 117 of those players appeared on the state’s voluntary self-exclusion list.
Investigators also found that the games offered on the sweepstakes platform “appeared identical” to the ones supplied by High 5 Games to Connecticut's regulated online casinos, which are operated by the Mohegan and Mashantucket Pequot Indian tribes via partnerships with FanDuel and DraftKings.
According to the suspension order, High 5 told DCP officials that although the games are visually similar, the games on its sweepstakes platform “differ in signature and return-to-player rates” from those provided to the regulated online casinos.
“In other words, slight changes in the game code make the unlicensed games behave and pay out differently than those provided to the licensed operators,” wrote Bryan Cafferelli, the commissioner of the DCP, in the order.
“Connecticut licensed operators however are required to certify their game signatures and meet a specified return to player rate, a requirement that ensures the integrity of the game and provides a safeguard to consumers.”
Investigators also noted that, on the company’s website, a link to the High 5 Casino platform appears on the left-hand side of the same page, while on the right side of the page sits a display of and links to the company’s regulated gaming licenses, including Connecticut.
“DCP Investigators became concerned that consumers may reasonably be misled into thinking the unlicensed High 5 Casino platform was licensed by the State of Connecticut, especially if it was accessed through High 5 Games’ website, which contains evidence of being a licensed online gaming service provider with the State of Connecticut,” Cafferelli wrote.
Investigators were also able to make deposits and wagers on the High 5 Casino platform as late as Thursday (March 13), despite the company claiming it would stop allowing Connecticut players to make new purchases of sweepstakes coins as of February 18.
The company had also updated its terms of use to state that players in Connecticut, Pennsylvania and West Virginia would no longer be able to play sweepstakes games as of February 27. High 5 Casino still offers sweeps games in 37 states.
The DCP also said in its statement that it will seek restitution for players who suffered a loss “after being misled that High 5 Casino was a legal form of gaming in Connecticut”, and that any games provided to FanDuel and DraftKings on the regulated platforms would be removed immediately.
“It is a privilege to hold this license, and we expect our credential holders to take that responsibility seriously,” Cafferelli said in the statement. “High 5 Games took advantage of their credential to mislead consumers into believing they were participating in gaming on a legal platform when, in fact, they were breaking the law.”
The Connecticut action comes as state regulators and lawmakers are paying increased attention to sweepstakes gaming, with legislators in multiple states including Connecticut proposing legislation to expressly prohibit the activity, and certain regulators sending cease-and-desist letters to companies.
The action also reflects the quandary faced by some suppliers that supply casino games to both regulated online casino operators and to unregulated sweepstakes providers, and it could give further reason for caution among licensed companies, both on the operator and supplier side, considering operating directly in the sweepstakes market.
