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The increasing number of lawmakers taking an interest in curbing sweepstakes casino games in their respective states are faced with a challenge of crafting bill language that will actually accomplish their policy goals.
Lawmakers in more than a half-dozen states have introduced bills that intend to restrict or prohibit sweepstakes casino gaming in response to the rising popularity of the games and subsequent pushback from licensed gaming companies.
In five of those states, the bills have been approved by at least one legislative committee. In Maryland and Mississippi, bills have also cleared the first chamber of the state legislature.
Although all have similar intent, many of the bills use different paths and different language in hopes of restricting sweepstakes casino games, underlining the challenge that lawmakers are facing.
In Maryland, Senate Bill 860 was approved unanimously by state senators on March 13 and is now pending in the House of Delegates.
The bill defines an “online sweepstakes game” using set criteria, describing it as a game that is available on the internet, and uses a dual-currency system of payment that allows a player to exchange the currency for a prize, including cash or a chance to win a prize.
Games targeted for prohibition also must either simulate casino-style gaming, such as slot and table games, lottery games, or sports wagering.
Virtually identical language appears in New York’s legislative effort to prohibit the games.
Senate Bill 5935 cleared the Senate Racing, Gaming and Wagering Committee last week but has yet to be considered on the Senate floor.
The New York bill empowers the state gaming commission to conduct investigations and issue cease-and-desist letters to ensure compliance. Maryland authorities have already begun to do so, sending cease-and-desist orders this month to prominent sweepstakes operators such as VGW and High 5 Casino.
Still, even with a more specific bill, statutory change may only alter the operations of sweepstakes operators rather than outright prohibit them.
“The core product in this model isn't sweepstakes; the core product is actually the freemium games,” said Bill Gantz, a partner at Duane Morris law firm, at this month's NEXT Summit New York.
“The only thing sold on the platform is the freemium or the gold coin, so to the extent any state or operators wish to claw back, they can still remain in a state as a freemium operator.”
“I do think as you get more specificity under the law and operators either can offer their particular product, it's just going to beget more innovation, more ideas,” Gantz added.
“You don't have to have a dual currency platform in order to operate a freemium model with a sweepstakes, so I think that people will just make appropriate adjustments.”
Mississippi’s effort to ban sweepstakes, Senate Bill 2510, involves a more blanket ban on online gaming, as unlike New York and Maryland, the Magnolia State does not permit online sports betting outside licensed casino properties.
The Mississippi bill would designate “any online, interactive, or computerized version” of a game described in statute, or “any other game of chance or digital simulation thereof, including but not limited to online race books, online sports pools, and online sweepstakes casino-style gaming” as a gambling device and specify that its operation is unlawful.
The Mississippi bill also adds language including online sweepstakes casinos to existing state law that prohibits sweepstakes devices and land-based sweepstakes cafes.
Many states passed laws to outlaw sweepstakes cafes after they became popular in the late 2000s and early 2010s, although many stopped at outlawing sweepstakes devices rather than the underling games themselves.
The legislation enacted to prohibit sweepstakes cafes and devices could also be a model for the type of specificity states will need to achieve their policy goals with regard to online sweepstakes.
While Maryland, Mississippi and New York all have specific bills designed to curb sweepstakes gaming, lawmakers in other states have included provisions targeting sweepstakes in larger gaming reform bills being considered in the legislature.
In Connecticut, Senate Bill 1235, which passed the Joint Committee on General Law on Monday (March 24), includes a single line devoted to the issue to specify that a sweepstakes cannot “allow or facilitate participation in any real or simulated online casino gaming or sports wagering unless such person is licensed” under state gambling law.
Connecticut regulators have been among the more aggressive in pursuing sweepstakes operations under existing state law, with the state’s Department of Consumer Protection sending a cease-and-desist order to VGW last year. It then announced earlier this month the license revocation of High 5 Games as a licensed supplier for operating “an illegal casino” under its sweepstakes brand, and promised charges would be filed.
Legislation in Florida would also tie a restriction on sweepstakes to an overarching gaming bill that is primarily focused on increasing penalties for land-based illegal gaming operations.
Senate Bill 1404 would define illegal internet gambling as playing any game “in which money or other thing of value is awarded based on chance, regardless of any application of skill” on an internet device that “simulates casino-style gaming”.
The bill would include a misdemeanor criminal charge for players, and the operator of such a game would face third-degree felony charges.
Legislation has also been filed in New Jersey and Nevada to restrict sweepstakes or enhance the penalties for offering unlawful gaming, but those bills have yet to advance out of committee.
