Sweepstakes Casinos Set to be Banned?
Sweepstakes Casinos are under threat from a new set of draft regulations for the online gambling industry, issued by the National Council of Legislators from Gaming States (NCGLS).
As it stands, the legislation is only a draft, and was opened for public consultation in November 2024. After a period of public consultation and commentary in an open forum, and subsequent refinement, the draft laws will be presented to the State and Federal authorities.
Sweepstakes casinos have come under the microscope in recent times, and the loopholes that make them legal in the United States might be about to snap shut.
Fines and Jail are Powerful Deterrents
The NCGLS’s draft law would implement a blanket ban on the sweeps model. It recommends a $10,000-$100,000 fine for each violation and up to two years imprisonment for repeat offenders. In practice, it may be hard to jail executives, but the statement of intent is clear.
According to the NCLGS, the model legislation aims to “establish an effective, comprehensive, and efficient regulatory framework consistent with public policy that will foster public confidence and trust in the integrity of the regulatory process and the fairness of internet gaming operations.”
The draft legislation is an all-encompassing document that goes well beyond sweepstakes casinos. It includes a proposed gambling tax of 15-25%, a maximum daily deposit of $20,000, a ban on using credit cards to make deposits, and a standard minimum age of 21.
The NCGL also wants to strengthen laws against targeting minors, with strict rules against characters, performers, or influencer marketing that appeals to audiences under 21. The draft set of laws also enforces Know Your Customer (KYC) and Anti-Money Laundering protocols.
Blueprint for Legal Gambling in the US
While the legislation intends to standardize the regulations in the seven states that currently allow online gambling, it also wants to create a blueprint for other states considering legalizing online casinos.
Traditional online casinos are banned in all but those seven US states, but the complex set-up of sweepstakes casinos effectively sidesteps the regulations. As an evolution of the best social casinos, featuring a free play system with Sweeps coins issued as bonuses, sweepstakes casinos technically don’t offer real money gambling.
Then, sweepstakes casinos effectively slip through a regulatory gap with this free-to-play model. The best sweepstakes casinos have become a major force in the market and sweeps casinos are one of the biggest growth sectors in the industry. Chumba Casino, Wow Vegas Casino, Pulsz, and McLuck have become household names in the industry and are some of the fastest-growing casinos.
Massive Growth of Sweepstakes Casinos
From 2019-2022, the sweepstakes casino grew by an incredible 89% year-on-year, and 55 million Americans play on them every year. More than 91% of sweepstakes casino players are US-based, and what started out as a hidden niche in the industry has now exploded. Ultimately, these sweeps casinos may have flown too close to the sun for the regulators’ liking.
There has already been pushback against these casinos on a State Level. In November 2022, Chumba Casino and LuckyLand casino parent company VGW agreed to pay $11.75 million to settle a class action lawsuit by Virginia residents. Since then, there have been a string of other cases against VGW.
Now, the gaming regulator wants to implement a simple set of regulations that work across the board, which could mean a blanket ban and an end to the sweepstakes casino model.
