The Arizona Department of Gaming (ADG) issued multiple cease-and-desist orders to illegal and unregulated gambling operators Thursday. The operators include providers of sweepstakes casinos, sweepstakes sportsbooks, and unlicensed online gambling providers.
Key Insights
- Arizona alleges that the companies cited are felony criminal enterprises and are violating Arizona gaming laws.
- Arizona has been especially vigilant in warning residents of the dangers of unregulated operators.
- More states are seeking to thwart the rise of sweepstakes gambling operators with cease-and-desist orders and tougher laws.
The operators who received ADG cease-and-desist orders include ARB Gaming LLC d/b/a Modo.us, Epic Hunts, Generiz, ProphetX, My Bookie, and BetUS.com.pa.
In 2021, Arizona sports betting, both online and retail, became legal. The state has not, however legalized online casinos or iGaming. So, any accessible online casino in Arizona is illegal and unregulated. Meanwhile, Arizonans can go to the ADG’s website to view a list of approved online sports betting and fantasy sports operators.
In January, the ADG issued a public service announcement, warning residents about the risks of using illegal online casinos and sweepstakes platforms. In March, the ADG issued a consumer protection alert, noting the rise of fraudulent online casinos targeting Arizonans.
Sweepstakes gambling sites on the rise
Arizona, however, is not the only state struggling to contain illegal or unregulated gambling operators. Sweepstakes casinos, especially, are on the rise. Sweepstakes gambling sites allow customers to wager with free coins. Additional coins, however, can also be purchased with real money and exchanged for cash and prizes. These types of online casinos have come under fire from several state lawmakers and regulators.
Some states, like Arizona, have issued cease-and-desist orders to specific sweeps operators. Other states are introducing legislation to clearly prohibit sweeps operations. For instance, Florida SB 1404, which would ban sweeps and increase penalties for illegal gambling providers, recently made it through yet another Senate committee. Meanwhile, Louisiana SB 181, filed earlier this month, would likewise prohibit sweepstakes gambling.
Prediction markets and state regulators brace for a showdown
Prediction market sites are also a growing problem for state regulators. Traditionally, these sites let people invest in futures contracts, based on the outcome of certain events like elections. Lately, however, some prediction markets started to offer futures contracts on sporting events, becoming de facto sportsbooks. Since futures providers are regulated by the federal government’s Commodity Futures Trading Commission (CFTC) and not by states, prediction markets that provide sports event “investing” are currently skirting state sports betting and tax laws.
Ohio recently sent cease-and-desist orders to three federally regulated prediction market providers, Kalshi, Robinhood, and Crypto.com. Illinois, Nevada, Maryland, New Jersey, and Montana have also sent cease-and-desist orders to prediction market providers. Meanwhile, Tennessee asked the CFTC to prohibit prediction market operators from offering sports event futures contracts.
The jurisdiction battle over the regulation of prediction markets offering sports betting could end up in court – maybe even the highest court. If that happens, the law prohibiting interstate sports betting, the 1961 Federal Wire Act, will have to do a lot of heavy lifting to preserve the states’ rights to regulate sports betting.
