Founded in 1994, the American Gaming Association (AGA) aims to promote, educate, and lobby on behalf of the gaming industry. Their main headquarters are in Washington D.C. While online gaming is legal in several US markets, there are still states without it. U.S. sports betting regulators are still in business with illegal offshore markets like Bovada. The AGA is working hard to do its part to protect the regulated gaming market. Just last week, the AGA began circulating a memo. It was titled “Regulatory Vigilance Critical to Ensure ‘Sweepstakes’ Don’t Threaten Consumers and Undermine Gaming Regulation.” Their memo stated that companies are using “sweepstakes-based” models to try and avoid gaming laws and regulations. All U.S sportsbooks and online casinos must abide by these common laws and regulations.
Certain sports betting customers across the US are being deprived of protection as some states are forgoing significant tax and revenue opportunities. The final message from the AGA’s memo was to suggest state regulators and the attorney general should investigate companies that are using the “sweepstakes” model. This type of model allows players to wager for free or purchase virtual currency through regulatory loopholes. Not what the AGA wants to see in the U.S. betting market. Additionally, users can exchange their virtual currency for real money. The duel-currency system is how operators can avoid licensing and regulation. In 2023, the Michigan Gaming Control Board asked three sweepstakes regulators to cease their operations.
Sweepstakes regulators avoid the scrutiny that legal sportsbooks face
According to the American Gaming Association (AGA), sweepstakes operators do not face the same regulatory scrutiny as legal U.S. sportsbooks and online casinos. In their memo, the AGA noted that the lack of oversight presents risks to the integrity and economic benefits of the legal gambling market. Sweepstakes operators have extremely weak regulations and protocols in place to ensure responsible gaming is being practiced. The AGA’s memo stated that sweepstake operators have not had any independent product testing to ensure basic fairness for all users. Finally, the AGA outlined the difference between sweepstakes and social casinos. Sweepstakes offers the duel-currency model to allow cashouts. However, users of social casinos cannot redeem their rewards for real-world value.
Other sports betting industries have noticed what the AGA has done
In 2024, the North American Gaming Regulators Association and the National Council of Legislators from Gaming States had a few conferences. That includes their summer summit panel held to outline the rise in sweepstakes and social casinos. Howas Glaser is the head of government affairs and legislative council at Light & Wonder. He had this to say about how his company will help tackle the issue of sweepstakes regulators.
“Sweepstakes’ sounds like an innocuous term; like kindly Ed McMahon is going to show up at your house with a big check if you buy a magazine and enter the contest,” said Glaser. “But now the original concept of sweepstakes has been weaponized to lure unsuspecting consumers into full blown online casino gaming, which is otherwise illegal in 44 states, with no responsible gaming protections, no gaming license, and no regulatory oversight.”
