The ideas of outlawing online sweepstakes games and gambling devices gained momentum in Tennessee’s legislature with approval by a Senate committee.
The Tennessee Senate Commerce and Labor Committee recommended Senate Bill 2136 for passage following an 8-0 vote, placing the measure on the full Senate floor for further consideration. SB 2136, filed by Sen. Ferrell Haile, is a companion bill of House Bill 1885 and was approved by the Senate committee during a hearing that featured no debate.
What would be considered an outlawed sweeps game in Tennessee?
Haile’s measure provides a clear and concise definition of prohibited online sweepstakes.
“This bill clarifies definitions related to casino-style games and sweepstakes,” said Haile during the hearing. “[SB 2136] shuts down perceived loopholes being exploited by illegal gambling operators and it authorizes the attorney general to seek civil injunctions against operators who are already criminally prohibited but not clearly subject to civil enforcement.”
SB 2136 defines an online sweepstakes game as an online or computer terminal game, contest or promotion that utilizes a virtual-currency system.
“This bill does not affect legal sports betting, fantasy sports, the Tennessee Education Lottery or lawful non-profit gaming,” continued Haile.
Under SB 2136, prohibited virtual currency systems must allow players to wager with a virtual coin or token that it is “directly purchased, received through a bonus or promotion, or received for free with the purchase of another type of currency or related product, service, or activity.” The system also allows the coins or tokens to be exchanged for cash or a prize.
“This bill also targets platforms operating without age verification and oversight, including those allowing underage and self-excluded individuals to gamble,” added Haile.
SB 2136 considers online sweepstakes games or gambling devices to be a violation of the Tennessee Consumer Protection Act of 1977. The measure considers the operation or promotion of online sweepstakes games an “unfair or deceptive act or practice affecting trade or commerce,” allowing the state’s Attorney General to impose civil penalties ranging between $5,000 and $15,000 for each violation.
“This bill closes existing enforcement gaps by granting the attorney general clear civil enforcement authority to take action against illegal operators and strengthening consumer protections,” said Haile.
SB 2136 puts investigations into sweeps games on the table
Haile’s bill also allows investigations by the state’s Attorney General and Reporter.
SB 2136 provides the state’s Attorney General and Reporter with the authority to request information for an investigation into any person who is believed to be operating or promoting an online sweepstakes game or gambling device. A person under investigation will also be required to file a statement or report to the Attorney General under oath.
The bill also requires all documents provided by a person under investigation to be confidential. Probe requests must adhere to state rules of procedure for service of a notice. A person who intently avoids and evades a request for information by the state’s attorney general will also be subject to a civil penalty of up to $1,000 per document requested.
Pushback against sweeps casinos in Tennessee
Haile introduced SB 2136 after Tennessee’s Attorney General sent cease-and-desist orders to nearly 40 online sweepstakes casinos that were accepting customers in the Volunteer State.
In December, Attorney General Jonathan Skrmetti’s office announced that it “successfully halted” the operation of 38 online sweepstakes casinos that leverage a dual-currency system of payment to allow players to participate in real-money gambling.
The sites that halted operations in Tennessee included Chumba Casino, Global Poker and High 5 Casino.
The Tennessee Sports Wagering Council has also sent a series of C&Ds to unlicensed gambling platforms with a presence in the state. The platforms included unlicensed sports betting sites Bovada, BetOnline and Sportzino, with the sites eventually exiting the state.
