In most states, playing slot machines for real money is illegal. But a group of companies that are known as Sweepstakes Casinos has found a way to find the law to have users play classic casino games online.
Their income has become 10-time in the last five years and they are now large enough to contain advertisements with Ryan Seacrest, Drake and Michael Phelps. Only recently have states such as New York and Maryland considered limiting them, with billions of tax dollars at stake. But the Maas in the course of Sweepstakes casinos complicates the ability of the states – and the desire – to take action.
That Maas in the law? The rule “No purchase required” that distinguishes a legal sweep stakes from an illegal lottery.
It is a rule that you might be familiar with if you have ever played the monopolistic promotion of McDonald. In case you missed it, it worked here: during the promotion, certain menu items came with special “game piece labels” from the Monopoly Game Board. These can be exchanged for prices, such as a free hamburger or a cash sum. The key is that you do not buy the tokens directly; They came with your purchase of fries. And to be fully eligible as a sweep stakes, McDonald’s also had to let you receive by post – where the “no purchase needs” comes in.
Instead of selling fries, the Sweepstakes casinos sell a worthless online currency that is often called gold coins. (You can use the coins as a play money for gaming, but they cannot be exchanged for prizes.)
And instead of a monopolistic token, your purchase will earn you another Currency, often known as sweepstakes cash. This “cash” is usually the same as dollars. So if you spend $ 100 on gold coins, you will receive $ 100 on Sweepstakes Cash. This is what you can use to gamble on games such as blackjack or roulette, and all the win in dollars.
You can also receive a small amount of sweepstakes cash by post, with the same sweepstakes rules that would follow a promotion of McDonald’s. By adding extra layers to the process, the Sweepstakes casinos made it possible in practice to gamble online legally in states that otherwise prohibit online gambling.
There is a lot of demand for it. Sweepstakes Casinos appeared for the first time in 2016 and have grown exponentially into one estimated $ 8 billion in annual turnover.
Keith Miller, a professor of the law study of Drake University, compared sweepstakes to other companies that grew quickly while they are active in legal gray areas: “It is like what Uber did. They just said what we do is completely legal and we do not have to be regulated.”
There is at least one large Sweepstakes casino that is currently active in 47 states. Most states have not taken any action, but since 2024, legislators have introduced legislation in at least 10 states to close the legal distinction that Sweepstakes use casinos to work.
In an e -mail, Ryan Bailey of the Social & Promotional Games Association said it was a misconception that sweepstakes casinos are ‘online casinos’; Instead, they use another model that “allows free access and is built around promotional involvement, not gambling.”
Playing whac-a-mole
In New York, where the Stupeling Act Online Casino -Gaming prohibits, State Senator Joseph Addabbo Jr. Recently introduced a bill to ban Sweepstakes casinos. “We’re not talking about hamburgers,” he said. “We’re talking about online gambling.”
But legislation has challenges. Although Mr Addabbo Jr. The sponsor of the bill is, he said that the legislative process would be a “cumbersome and slow way to deal with it.” He stated that it would be “more efficient” if the State Gaming Commission or the Attorney General came in instead.
Regulators also do not have perfect enforcement options. Sweepstakes casinos have no gaming license to withdraw. And if an attorney general had a matter that they operated illegally, Sweepstakes Casinos could claim that they operated according to the same rules as all other legal sweep stakes.
John Holden, a professor at Indiana University who has written extensively about the history of gambling regulation, compared the current situation with “playing Whac-a-Mole”.
“Suppose you have made a new law that focuses on these sweepstakes casinos,” he said. “What if someone comes up with something new? I think that causes a lot of hesitation for legislators.”
Sweepstakes casinos are not unique in testing the boundaries of gambling laws.
Most states limit slot machines, but ensure that prizes are won in “games of skills”, such as throwing a basketball in a hoop to a state grant. In Pennsylvania have many gas stations now called games “Skills -based slot machines. “In most respects, they are just like any other slot machine, but with an extra” skill “element, as the user clicks on a matching symbol to win money.
Part of the pot
Legislers in most states have not been active in chase after Sweepstakes casinos.
“If I take on a law, I want it to have an impact; to have an impact, it must have enforcement,” said Professor Holden about the calculus with which the legislators are confronted. “New resources must go into enforcement, and it is a bit difficult in my mind to see that as a big return.”
It seems that states with strict anti-gambles would be the most aggressive about the cleaning in Sweepstakes casinos. The opposite is true; They are states with legal Online gambling that have more stimulus to ban Sweepstakes casinos.
Sweepstakes casinos do not pay gambling tax – thanks to the Maas in the law that they use to prevent them from being classified as gambling. For states that prohibition online gambling, there are no lost income.
New Jersey, Connecticut and Maryland allow online casino gambling. This year all three of the legislators of the state of laws introduced laws that prohibit Sweepstakes casinos.
In 2019, when Michigan is a law for legalizing online casino gaming, the Michigan Gaming Control Board also gained the power to investigate a site that offers gambling without a license. In 2023, the state Close a Sweepstakes Casino That still accepted customers in Michigan.
Kurt Steinkamp, Chief of Staff of the Michigan board, says that the licensing system helps to ensure fairness and compliance with the regulations for consumer protection. It also ensures that when residents online gambling in Michigan, the state sees its share in income.
“Companies that are active in the black market or on the gray market directly compete for income with recognized regulated entities,” said Mr. Steinkamp. “And that certainly influences tax dollars.”
Online casino gambling in Michigan is large companies. In 2024, the state won around $ 450 million in tax revenues, compared to $ 147 million from online sports gambling. That relationship is true in almost all states that make both types of gambling possible.
Some state laws have found it more attractive to legalize and regulate online gambling than to try to eliminate all forms of online gambling. Legislators in Arkansas Last week, legislation introduced online casino games and at the same time to ban Sweepstakes casinos.
With regard to the Sweepstakes casinos, to keep growing, they need most states not to follow Arkansas or New York, but to stay exactly where they are.
Extra work of Alicia Parlapiano
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