Sweepstakes growth
If you’ve spent any time gambling online in the US over the last few years, there’s a good chance you’ll have come across sweepstakes casinos. With US gambling laws being anything but straightforward, sweepstakes have emerged as one method to take advantage of legal gray areas in state laws on betting, offering what amounts to real-money gambling without an outright breach of the law.
On popular sites such as Plusz, High 5, and Stake US, players can take advantage of these platforms, which use two virtual currencies: gold coins for free-to-play games and sweep coins, received as a bonus when purchasing gold coins, and can be redeemed for real-money prizes.
for bettors, they function more or less identically to a traditional gambling site
The two-currency system allows operators to argue that the site is a promotional sweepstakes operation rather than a casino, even though, for bettors, they function more or less identically to a traditional gambling site. Now, however, lawmakers are getting more serious about cracking down on the practice, and it seems the sites could be living on borrowed time.
Regulatory pressures
As with many gray market gambling sites, one major threat to their existence is that they’ve come under attack from both directions. Not only have lawmakers seeking to uphold gambling restrictions begun to target them, but they’ve also made enemies of regulated sites, which see them as taking up valuable business without having to go through the same checks and licensing procedures.
Connecticut has become the latest state to issue a ban on the practice, with Governor Ned Lamong signing off on Senate Bill 1235, which prohibits their operation. Regulated online casinos are legal in Connecticut, and the bill also included provisions for expanding sports betting and online poker in the state, while simultaneously cracking down on sweepstakes.
Connecticut follows other states in banning the sites which have no provisions for regulated online casinos, including New York and Montana. With sweepstakes operators fighting a two-front war against both prohibitionists and the online casino lobby, it seems a fight they’re doomed to lose.
Growth still possible
Yet despite that pressure, there is still plenty of ground for sweepstakes to hold onto. The vast majority of US states have yet to pass any legislation blocking them, and have no regulated casino market. On an earnings call earlier this year, the CEO of gambling company Catena Media Manuel Stan stated: “when you reiterate the fact that only 16% of the US population live in states where casino regulation is already in place… there’s a future massive opportunity.”
the fact that sweepstakes sites pay no tax means there is less incentive for lawmakers to restrict them
The sweepstakes industry is now estimated to be worth $8bn in the US, but the lack of regulation in most states may be their best route to survival. Not only can they avoid lobbyists from established online operators, but the fact that sweepstakes sites pay no tax means there is less incentive for lawmakers to restrict them in states without gambling regulation, since there is no tax revenue being lost.
“It’s like playing Whack-a-Mole,” said gambling law expert John Holden in an interview with The New York Times. “Say you crafted a new law that targets these sweepstakes casinos. What if someone comes up with something new? I think that’s driving a lot of hesitation for legislators.”
