The American Gaming Association (AGA) is taking a stance against sweepstakes-based wagering models amid their growing popularity.
The AGA recently released a new policy statement regarding sweepstake casinos and sportsbooks as the gambling vertical continues to grow. The AGA believes sweepstake operators have the ability to circumvent state gambling laws and regulatory frameworks leading to a loss in potential tax revenue.
The trade group alleges sweepstake models also fail to ensure protection and fair play for consumers.
“The lack of regulatory oversight presents many risks for consumers as well as the integrity and economic benefits of the legal gaming market through investment and tax contributions,” said the AGA in its policy statement. “These sweepstakes-based operators have weak (if any) responsible gaming protocols and few, if any, self-exclusion processes.”
The AGA has taken an exception to the sweepstakes model as it allows consumers to play for “free,” or buy virtual currency that is used to enhance gameplay to receive cash prizes. Sweepstake operators argue the dual-currency format is allowed under sweepstakes law.
The AGA has also placed some responsibility on regulators to provide proper oversight over sweepstake casinos and sportsbooks. The organization wants regulators and government leaders to initiate investigations into operators that offer sweepstake wagering. The probes will determine whether they are in compliance with state regulations and laws.
“Where state laws and regulations are not clear, legislatures should consider enacting legislation to prevent unlicensed operators from exploiting loopholes in sweepstakes regulations to offer online real money gambling,” continued the AGA.
Sweepstakes leader hits roadblock
Some states have tried to take action against operators such as Virtual Game Works (VGW). SBC Americas recently learned the Delaware Division of Gaming Enforcement cent a cease and desist to the company in February 2023, but the company has yet to comply and leave the state.
VGW also faced scrutiny in Michigan where the state’s Gaming Control Board (GCB) ordered the operator to cease operations of its sweepstake offerings in the state. The AGA details VGW’s shuttering of operations in Michigan in its sweepstakes policy.
The GCB sent its cease-and-desist letter to VGW for violating Michigan gaming laws for “conducting illegal gambling by offering an internet game in which a player wagers something of monetary value for the opportunity to win something of monetary value.”
The GCB determined that VGW violated the Michigan Penal Code, the Lawful Internet Gaming Act, and the Michigan Gaming Control and Revenue Act.
VGW and other sweepstake operators will attempt to solidify a presence in other markets as player purchases on sweepstakes gaming are expected to reach approximately $8.5 billion in 2024, according to research conducted by Eilers & Krejcik.
