Maryland is advancing legislation prohibiting online sweepstakes casinos, a dramatic shift in state policy towards unregulated gambling sites.
Sponsored by Sen. Paul D. Corderman, Senate Bill 860 (SB 860) seeks to close a loophole in the law that currently allows sweepstakes-based internet gaming to be operated without seeming regulation. The Maryland Senate Budget and Taxation Committee voted 13-0 to approve the bill last week.
A companion bill, House Bill 1140 (HB 1140), sponsored by Delegate Eric Ebersole, is under consideration by the House Ways and Means Committee. The bill was set for a hearing but has not yet been reported out.
If passed, the bill would prohibit a person from operating or promoting a sweepstakes casino in Maryland and give the Maryland State Lottery and Gaming Control Commission (LGCC) authority to deny gaming licenses to sweepstakes-based gaming operators.
The new law would define internet sweepstakes games as websites with a two-currency model where customers purchase virtual tokens - generally called sweepstakes coins - to make wagers on casino-style games or sports events. The prizes can be exchanged for real money or cash equivalents, essentially the same business model as traditional gambling but with less regulation.
Legislators indicate that this model has allowed sweepstakes casinos to skirt conventional gambling laws, so several states have brought forward mandatory closures of the operations.
Maryland legislation has severe repercussions against violators. An individual or company found operating an online sweepstakes gaming website within the state could face a fine between $10,000 and $100,000 and up to three years in prison.
Sweepstakes operators pull out of Maryland under legislative scrutiny
With the anticipated passage of the bill, several online sweepstakes sites have already withdrawn from Maryland's market. McLuck and Hello Millions recently added Maryland and West Virginia to their list of forbidden states. Three other sites - Jackpota, Mega Bonanza, and Spree - closed down in Maryland on February 21.
These steps reflect a broader movement, as all five platforms have suspended users from at least 12 states where similar legislative efforts are being made.
Maryland lawmakers have resented for years that sweepstakes casinos exploit regulatory loopholes to operate outside the jurisdiction of the Maryland State Lottery and Gaming Control Agency. Compared with traditional casinos and licensed sportsbooks - neither of which exists unregulated and untaxed - sweepstakes-based systems have largely evaded the same level of inspection.
If approved, Maryland would become the latest state to join an increasing list of states actively seeking online sweepstakes gaming. Mississippi, New York, Washington State, and several other states recently took steps to pass similar legislation to fill loopholes that allow these sites to function as de facto casinos.
New Jersey joins Maryland on a mission to ban sweepstakes casinos in the Garden State, filing bill A5447 to ban them permanently. This bill surprised many after bill A5196 was filed in January, with lawmakers up to discussing the possibilities of regulating sweepstakes.
