Louisiana joins nearly a dozen states seeking to ban sweepstakes gambling. Sweepstakes gambling sites allow customers to wager with free coins. The additional coins, however, can also be purchased with real money and exchanged for cash and prizes. These types of online casinos have recently come under fire from state lawmakers and regulators.
Key Insights
- At least 10 U.S. states have filed bills that would ban sweepstakes gambling.
- Fines as high as $100,000, along with criminal penalties, have been proposed.
- In many states, bills also target media affiliates, geolocation providers, and gaming suppliers, along with the offending sweepstakes gambling providers.
Louisiana Senate Bill 181 would prohibit sweepstakes gambling. The bill defines illegal sweepstakes gaming as “any games, contest, or promotion that is available on the internet or accessible on a mobile phone, computer terminal, or similar access device that utilizes a dual-currency system of payment allowing the player to exchange the currency for any prize or award or cash or cash equivalents, or any chance to win any prize or award or cash or cash equivalents, and simulates any form of gambling shall constitute illegal gambling by computer and shall not be considered a legal sweepstakes.”
SB 181 would ban any sweepstakes gambling in the form of casino games, lottery-like games, and sports betting. Louisiana’s bill would go beyond penalizing sweeps operators. It would also target geolocation providers, gaming manufacturers, gaming suppliers, platform providers, promoters, and media affiliates associated with illegal online sites.
States gang up on sweepstakes gambling
Other states are also casting a wide net, penalizing both operators and associates. For instance, Maryland’s Senate unanimously passed S.B. 860 last month. While the bill prohibits someone from operating, conducting, or promoting an online sweepstakes game in the Old Line State, it also prohibits media affiliates, payment processors, and geolocation providers.
States, like New York, view sweepstakes gambling as a threat to their legal gambling operators, those that are licensed by – and pay taxes to – the state.
New York Sen. Joseph Addabbo Jr. recently said, “These products and operations are untaxed and unregulated. They present unfair competition to the state's legal, highly regulated and economically important casinos.”
Addabbo’s bill, S5935 has made it out of committee and into the Senate.
Connecticut’s SB1235 would make operating illegal sweepstakes gambling a Class D felony. Likewise, Nevada’s SB 256 also seeks to ramp up the penalties for illegal online gambling operators, including sweeps.
Meanwhile, some lawsuits against sweeps providers aren’t waiting for additional legislation. In California, a case is pending against the sweepstakes provider Stake.com, alleging the company violates California’s current gambling laws.
Not everyone, however, sees sweepstakes gambling as a threat, especially its industry association. The Social and Promotional Games Association (SPGA) feels the current wave of legislation goes too far. In a recent statement in response to Louisiana’s SB 181, the SPGA states, “This misguided legislation endangers lawful businesses and sends a chilling message to investors, jeopardizing Louisiana’s burgeoning tech sector.”
The SPGA points out that sweepstakes are used as promotional tools for everything from fast food to app developers. They worry that some of the proposed legislation could unintentionally criminalize rewards and loyalty programs, like those used by airlines and hotel chains.
