Legislation that would ban online sweepstakes in Maryland is making headway as it was approved unanimously in a Senate committee and discussed in a House committee this week.
Sen. Paul Corderman’s SB 860 and Del. Eric Ebersole’s HB 1140 both aim to prohibit “operating, conducting, or promoting online sweepstakes games” or supporting such actions.
The bill defines sweeps as games that utilize “a dual-currency system” allowing players to exchange the currency for any prize or award or cash or cash equivalents or giving them a chance to win such prizes or cash equivalents.
The bills would target not only sweeps operators but any companies who supply games to them.
“We cannot tolerate a situation where we grant a gaming license to a company which is supplying illegal games as well,” said Ebersole at a House Ways and Means Committee meeting on Tuesday. “The legislation will force these illegal competitors out of our state and provide a powerful deterrent to offshore and domestic illegal online gaming from entering our state.”
The Maryland Lottery and Gaming Control Agency would have the right to deny or revoke a gaming license to anyone if they accept revenue directly or indirectly connected to sweepstakes. The agency sent letters of support for both bills to their respective hearings.
On Monday, after a hearing last week, the Senate Budget and Taxation Committee unanimously approved Corderman’s bill 13-0 and advanced it to third reading.
One Starbucks cup or two?
At Tuesday’s House committee meeting, delegates heard from Ebersole and Light & Wonder in favor and from VGW and the Social and Promotional Games Association (SGPA) in opposition.
VGW representative Josh White and SPGA spokesperson Jeff Ifrah both argued that applying one sweeping definition of illegal casino gaming does not fairly represent sweeps and social gaming. Using comparisons with everything from Candy Crush to programs offered by Starbucks and McDonald’s, they asserted that it is unfair to punish operators who provide free-to-play games.
“VGW uses sweepstakes promotions the same way that McDonald’s and Microsoft do: as a marketing tool where players never pay for a chance to win,” said White. “But this bill is so broad … and based on misconceptions that would eliminate a well-regulated and legal form of digital entertainment while pushing Marylanders towards unregulated offshore platforms. A better approach is regulation, not prohibition.”
“Currently, casino gambling is illegal but promotions are legal,” added Ifrah. “So this is a bill that seeks to make something that’s legal in Maryland illegal. It’s not just simply a bill that seeks to reiterate that illegal casino gambling should remain illegal.”
Ifrah pointed to Starbucks’ “sweepstakes game” that allows customers to get points every time they buy a coffee and redeem those points to win Marriott gift cards and other rewards as something that would be outlawed if this bill passed.
“They always say ‘no purchase necessary,’ but we all know that the more coffees you buy, the more tokens you get,” he said. “Starbucks does use dual currency, so Starbucks would become a crime and anyone who supported Starbucks would be considered to be committing a crime.”
How does this intersect with iGaming bills?
Maryland also has multiple bills in play this year to legalize online casino gaming, one of which is sponsored by Ways and Means Committee Chair Del. Vanessa Atterbeary.
Ifrah noted that Corderman and Ebersole’s bills “cobble together” online gaming operators, offshore operators and sweepstakes operators despite the fact that, he asserts, sweeps are legal under the Maryland Commercial Law Code Section 13-305.
“If iGaming passes, offshore operators and online operators would still be illegal,” he said. “If you don’t get a license, you’re out … If you wanted to amend 13-305, that would be the way to get to sweepstakes and promotions. This bill doesn’t even mention 13-305, it just ignores it and says promotions and sweepstakes are illegal.”
Light & Wonder representative Brad Rifkin, in contrast, argued that sweepstakes casinos are “a veil” for illicit gaming operators who provide casino gaming-like products. “Frankly, if it walks like a duck and quacks like a duck, it’s a duck,” he said. “It’s illicit gaming.”
Ifrah suggested that Maryland instead look to require anyone who wants to run a sweepstakes promotion to register and pay a fee to the Lottery to enable regulation. Del. Jason Buckel mused that perhaps the way forward is to ban companies offering “pure online gaming not tied to regular legal consumer activity.”
No vote was taken on the House bill, but the conversation in Maryland is gathering steam.
