The Maryland Lottery and Gaming Control Agency has intensified its efforts to prevent unregulated sweepstakes casinos in the state.
On March 12, the agency sent a formal cease-and-desist letter to Virtual Gaming Worlds (VGW), a sweepstakes casino operator, alleging that it ran online gaming operations in Maryland without a legal license.
VGW operates various successful sweepstakes-based online gaming websites, including Chumba Casino, LuckyLand Slots, and Global Poker.
In the letter, the Maryland regulator unequivocally stated that the sole lawful online gaming in the state is online sports betting and mobile and online fantasy contests.
The letter, signed by managing director Michael Eaton, explained that online casino gaming, also known as iGaming, is prohibited in Maryland.
The letter also stated that the Maryland Lottery and Gaming Control Commission has no record of VGW having any licenses for sports betting, casino gaming, or fantasy competition operations in the state. The agency explained that this lack of licensure or registration puts VGW in blatant violation of Maryland's gaming laws.
VGW must respond in writing to the cease-and-desist order by March 27 to confirm whether or not it is carrying out online gaming activity in Maryland and provide a full breakdown of its gaming content, including fantasy competition games or sports wagering.
According to the letter, the sweepstakes owner also has ten days to cease operations in the Old Line State. Noncompliance may result in severe consequences, such as a permanent ban on VGW from obtaining any future gaming licenses or registrations in Maryland.
Legislative efforts to ban sweepstakes casinos underway
The regulatory action against VGW is simultaneous with Maryland's legislative action to ban unregulated sweepstakes casinos.
State legislators have been calling for more stringent enforcement action against operators that sidestep traditional gambling legislation by using sweepstakes models, which offer virtual currency or tokens that can be used to play casino games.
Sweepstakes casinos tend to operate on a business model whereby the players purchase virtual currency for entertainment, commonly and sometimes with some probability of exchanging such coins for financial awards. Such a model makes the sites assert that they are not classic gambling businesses, which require sole state permits.
But regulators here and elsewhere have begun to review these business models more aggressively, arguing that they operate unlicensed casinos online. The measure put forward by the Maryland Legislature seeks to formally define and ban such activities outright, effectively ending any legitimate loophole that VGW and other sites may be exploiting.
Maryland's move against VGW is part of a broader national trend where state regulators are cracking down on sweepstakes-based gaming sites. VGW is the 12th operator to receive a cease-and-desist order from the Maryland regulator.
Similarly, legal battles have been fought in other states, such as Kentucky, Michigan, Mississippi, and Washington, where governments have sought to block or fine sweepstakes casinos that operate without proper licensing.
