New York Gov. Kathy Hochul’s signature is the last step in enacting legislation to ban online sweepstakes casinos after the state’s Assembly unanimously passed the bill.
Bill No. S05935A was passed by New York’s Assembly on Tuesday. The meaure prohibits the operation or promotion of online sweepstakes games that simulate casino-style games, bingo, lottery games or sports betting. S05935A, which was approved by the Senate following a 57-2 vote last week, defines online sweepstakes casinos as a prohibited category.
Under the bill, online sweepstakes casinos are a 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, or any chance to win any cash prize or award.”
The Empire State only applies the ban of online sweepstakes to entities that offer casino-style games with a cashout functionality while sweepstakes that offer non-cash prizes or equivalents remain legal.
In addition to banning the promotion and operation of dual-currency sweepstakes systems, S05935A also prohibits suppliers, payment processors, geolocation providers, media affiliates and certain investors from operating or promoting online sweepstakes games within New York.
The bill allows the New York State Gaming Commission, state police and the state’s Attorney General to investigate sweepstakes casino offerings and issue cease and desist orders to entities that fail to comply with S05935A’s standards. Entities or individuals that violate the measure are subject to gaming license revocation and at least a $10,000 fine.
Under the bill, fines collected from violations are deposited into the Commercial Gaming Revenue Fund. The proceeds support problem gambling education and treatment.
An advocacy group responded to the Assembly’s passage of the anti-sweeps bill.
“By blurring the line between lawful sweepstakes promotions and illegal gambling, this legislation threatens a vibrant digital entertainment sector while offering players no safer alternatives,” said Social Gaming Leadership Alliance Executive Director Jeff Duncan.
The SGLA is led by VGW with a membership that also includes B-Two Operations.
New York Attorney General takes action
New York is poised to implement an online sweepstakes casino ban after New York State Attorney General Letitia James took action against a group of operators.
The Office of the Attorney General identified 26 online wagering platforms offering sweepstakes casinos that use virtual coins. The office sent the group of operators cease and desist letters with the entire group complying with the orders in a timely fashion.
The group of operators included Fliff, Fortune Coins, High 5 Casino and Sportzino. VGW’s Chumba Casino, Global Poker and Luckyland brands also complied.
Two US markets implement sweepstakes ban
Last week, Connecticut became the second U.S. gaming market to explicitly enact a ban.
Gov. Ned Lamont signed Public Act 25-112 into law making online sweepstakes casinos illegal in Connecticut and providing legal repercussions for their operation or promotion.
Public Act 25-112 bans individuals and companies from offering or promoting a sweepstakes or promotional drawing that is not “not related to the bona fide sale of goods, services or property.” The law criminalizes the offering or promotion of sweepstakes using simulated gambling devices and sweepstakes tied to online casinos and sports wagering.
With the signing of Public Act 25-112 by Lamont, sweepstakes games are only legal in the state if they are tied to a retail grocery chain with games related to the sale of groceries.
The games cannot offer prizes that are redeemable for cash. If a company or person violates the bill’s rules, they are subject to the state’s penalty for professional gambling. Connecticut considers professional gambling a Class A misdemeanor.
Montana also bans the operation or promotion of online sweepstakes casinos.
Montana Gov. Greg Gianforte signed Senate Bill 555 in May placing a ban on online sweepstakes casinos in the state by amending the state’s existing gaming laws. The law also takes issue with dual-currency systems offered by online gaming operators.
An individual who knowingly violates Montana’s new law regarding online sweepstakes casinos will be charged with a felony and face up to 10 years in prison.
Montana’s ban on online sweepstakes casinos will go into effect on Oct. 1.
