The American Gaming Association (AGA), the national trade group for the U.S. casino industry, has raised concerns that sweepstakes casinos are not complying with U.S. gambling laws and evading states taxes on revenues generated via online casino-style games.
American Gaming Association published a memo via Vixio Regulatory Intelligence to address sweepstakes casinos
In a memo published via Vixio Regulatory Intelligence, the AGA stated:
“So-called ‘sweepstakes casinos’ offer traditional casino games such as slots, roulette, blackjack, poker, and others. … [Players can] play for free or buy virtual currency (often called Gold Coins) to further their gameplay.
“In addition to the Gold Coins-type virtual currency that can be purchased to fund gameplay, a second type of virtual currency is available: free credits (often called Sweep Coins) that a player will receive as a bonus with the purchase of Gold Coins or through promotions, welcome bonuses, daily log-in rewards, and other activities.”
The AGA is essentially arguing that sweepstakes casinos are able to take advantage of loopholes. They fall outside the regulation of state gambling commissions in every state with the exception of Washington and Idaho. Both states have legislation that bans sweepstakes casinos and sportsbooks from operating in local markets.
“Sweepstakes casinos claim that because they don’t require real money for their gameplay, they are not offering gambling under the letter of the law,” the AGA added. “However, functionally, sweepstakes casinos look and play like an online casino while using a dual-currency system to avoid licensing and regulation.
AGA argues that sweepstakes-based operators lack sufficient responsible gaming protocols, self-exclusion programs
The AGA also mentioned the presence of sweepstakes sportsbooks:
“Sweepstakes Sportsbooks offer ‘free-to-play sportsbooks’ where people can bet on each other’s wagers, or stake bets directly with each other. Many operate with two different types of free ‘tokens’ that can be used to wager, and users can exchange them for real money when won through gameplay.”
Additionally, the AGA noted that sweepstakes-based operators are not up to speed on responsible gaming protocols and self-exclusion programs. There is no third-party product testing to ensure fairness to players as well. Since so many are unregulated, there is no way to confirm that all players are at least 18 years old.
In February 2023, the Delaware Division of Gaming Enforcement sent a cease-and-desist order to sweepstake operator Virtual Gaming Worlds (VGW). VGW, an Australian company, is still operating in Delaware and owns Chumba Casino, Global Poker, and Luckyland Casino.
According to Legal Sports Report, Michigan regulators sent similar cease-and-desist orders to multiple sweepstakes casino operators in late 2023. Per LSR, those three operators (VGW, Stake.us, and PredictionStrike) all ceased operations in the Great Lakes State.
