New York’s Senate is the latest state legislative chamber to approve a ban on online sweepstakes casinos as the chamber voted overwhelmingly in favor of banning online sweeps and punishing anyone who works with them.
New York Sen. Joseph Addabbo’s S5935 was approved on the full Senate floor by a 57-2 vote on Wednesday evening. It has been sent over to the House and referred to the Assembly Ways and Means Committee.
The legislation would expressly outlaw online sweepstakes games that simulate casino-style games, video poker, bingo, lottery games or sports betting. The legislation defines online sweeps as an online contest or promotion that “utilizes a dual-currency system of payment allowing the player to exchange the currency for any cash prize, cash award or cash equivalents.”
It would ban not only the operation of online sweepstakes gaming but also prohibit parties such as suppliers, payment processors, geolocation providers and investors from working with those operators in the state.
Addabbo reiterated to the chamber on Wednesday that sweepstakes games that do not award cash prizes or cash equivalents, such as promotions offered by retailers like Starbucks, will still be legal as the language specifically refers to “casino-style games.”
The New York State Gaming Commission (NYSGC), state police and the Attorney General’s office (OAG) would be empowered to investigate and issue cease-and-desist orders to entities and patrons that fail to comply. Violators would be subject to a five-figure fine and potential gaming license revocation. Fines collected from banned online sweepstakes games would go towards the Commercial Gaming Revenue Fund to support problem gambling education and treatment programs.
Online gambling is illegal, remember?
Addabbo reminded the Senate that online casino gaming of any form is illegal in New York. Therefore, he suggested, if online sweeps are determined to amount to casino gaming, they should not be allowed.
“As of now, our state has not legalized online gaming,” Addabbo said on Wednesday. “The legal markets currently are the seven licensed casinos in New York and any other gaming issue that has been authorized by New York through you.”
The bill’s sponsor also asserted that online sweepstakes casinos “target minors with a click of a button.”
“We’re taking a good step to avoid that,” Addabbo added. “Until we legalize online gaming in New York, we do not want the illegal market to expand, to grow, to target minors or those that have problems.”
New York could change law after regulatory crackdown
The Senate approved the ban on sweepstakes casinos after the Empire State’s AG Letitia James announced late last week that the OAG is using its regulatory authority to shut down such operators in the state.
The OAG collaborated with the NYSGC to identify and shutter the operations of sweepstakes casinos, sending C&Ds to 26 online platforms in the state that offer gambling using virtual coins that can be redeemed for cash and prizes.
James reported that all 26 operators complied with the order, including Fliff, Fortune Coins, High 5 Casino, McLuck, Sportzino and VGW brands Chumba Casino, Global Poker and Luckyland.
Both the Social and Promotional Games Association (SPGA) and the Social Gaming Leadership Alliance (SGLA) issued statements expressing disappointment at the OAG’s enforcement action.
Bill moves to the Assembly
A counterpart bill in the Assembly had progressed through committees, but Addabbo’s Senate bill will now be addressed in that chamber.
If Assemblymembers agree to outlaw sweeps, New York will be by far the most populous state to ban the vertical this year.
Montana, Louisiana and Connecticut have all already done so, and a bill recently signed by the Nevada governor would also seem to apply less explicitly to sweepstakes.
