A bill in New Jersey that would ban online sweepstakes casinos from operating in the state took a step forward in the Assembly on Thursday after nearly two months of inactivity.
The Assembly’s Tourism, Gaming, and the Arts Committee advanced Clinton Calabrese’s A5447 by unanimous vote after a hearing in which major sportsbooks testified in support.
The bill aims to outlaw platforms that use virtual currency and offer cash prizes and establish new penalties for illegal gambling operations and practices, to be enforced by the Division of Consumer Affairs and Division of Gaming Enforcement (DGE).
Committee amendments modified the definition of “game” to include any game that mimics or simulates casino-style games or sports wagering, and to modify the definition of prize or prize equivalent to include any token object or virtual facsimile that can be exchanged, sold or redeemed directly or indirectly through third-party marketplaces or other methods.
The bill next heads to the Assembly Consumer Affairs Committee. It is not on a tight deadline, as New Jersey’s legislature doesn’t adjourn until the end of the year.
AG’s office, sportsbooks argue ‘unconstitutional’ sweeps need legal clarity
Calabrese, who is the vice chair of the committee, told the room that the idea to outlaw sweeps began in the state’s Attorney General’s office based on the belief that “companies have been exploiting a certain loophole” to offer online sweeps. He added that lawmakers are working with stakeholders “to try to come to a compromise.”
Stephan Finkel, the director of legislative affairs for the AG’s office, noted that New Jersey’s constitution states that no gambling of any kind should be approved without the majority of the voters agreeing. As sweepstakes casino gaming was not approved by a voter referendum, Finkel argued, they are unconstitutional.
Finkel also posited that, as online sweepstakes casinos “are made up to look different than what they are,” they are unauthorized gambling. On a separate point, he suggested that Calabrese’s bill is important in modernizing outdated gambling law terminology to ensure it adequately addresses new forms of gambling.
“The legislature can be very clear in saying, ‘this is what isn’t allowed in our gambling laws,'” added Finkel.
Sports Betting Alliance representative Eric Scheffler also weighed in to argue that online sweepstakes gaming poses a key legal issue.
“It’s essentially a legal maneuver that allows them to replicate the experience of online casinos while avoiding the licensing and regulation and taxation structure set up by the state policymakers across the country,” Scheffler said.
He also pointed to the fact that a lack of regulation for sweeps means that they are not subject to the kind of restrictions on advertising and responsible gambling that typical online casinos and sportsbooks are.
Don’t worry, Starbucks
Finkel also added that lawmakers are going to lengths to ensure that “we are not capturing things we shouldn’t capture.”
That is likely a reference to the Social and Promotional Games Association’s (SPGA) warning that anti-sweeps legislation risks punishing consumer promotional offers such as Starbucks‘ and McDonald’s rewards programs. The SPGA said at the time that Calabrese filed the bill that the legislation is “shortsighted” and “reckless.”
New Jersey’s legislators aren’t the only ones who are looking to add clarity on that particular issue.
In Louisiana, the sponsor of a sweeps ban bill stressed that, “regardless of what you’ve heard, this bill does not affect legitimate promotions, such as McDonald’s Monopoly, Starbucks or Marriott rewards.”
Calabrese pivoted from regulation to prohibition
Earlier this year, Calabrese filed a bill that proposed attempting to create a framework to bring online sweeps under regulatory oversight.
However, he subsequently pulled that bill and now wants them gone from the state entirely.
