Expansion in sweepstakes casinos, accompanied by increased review and critique, as declared by industry analyst
Sweepstakes casinos, a rapidly expanding segment of the gaming industry, have been a subject of debate due to their similarity to iGaming and the controversial nature of some regulators viewing them as a disguise for online gambling. These platforms allow users to play with a sweepstakes currency, which functions like real money and can be redeemed for cash prizes.
Despite being legal in most U.S. states, the regulatory environment surrounding sweepstakes casinos is increasingly contentious and shifting. States like New Jersey and Louisiana are moving to restrict or ban these casinos, citing constitutional and regulatory concerns. Arizona, Pennsylvania, Florida, Nevada, Maryland, Alabama, and other states have issued cease-and-desist orders or considered bills to regulate sweepstakes casinos more stringently.
The growth of sweepstakes casinos is impacting broader iGaming legislation in the U.S. by highlighting gaps and loopholes in current online gaming laws, fueling state-level debates, and complicating efforts to legalize or expand traditional online casinos. The controversy surrounding sweepstakes casinos is encouraging states like Maryland and Virginia to pursue iGaming legalization alongside targeted sweepstakes casino bans or regulations.
Macquarie analyst Aaron Lee predicts that the growth of sweepstakes casinos could potentially lead to more iGaming legislation. The American Gaming Association (AGA) is encouraging regulators to pay more attention to the dual currency employed by sweepstakes casinos because it flouts federal and state laws.
Despite the controversy, sweepstakes casinos saw a surge in revenue last year, reaching $4.2 billion, according to Eilers & Krejcik Gaming (EKG). The industry is expected to grow to $5.6 billion of gross revenues in 2024E, and $6.9 billion in 2025E, according to Eilers' forecast.
In summary, sweepstakes casinos remain legal under federal and most state laws due to their compliance with sweepstakes rules and exclusion from direct gambling regulations. However, their rapid growth and unresolved legal gray areas are driving increased scrutiny and legislative action at the state level, significantly influencing the landscape and future trajectory of broader iGaming legalization in the United States.
- The controversy surrounding sweepstakes casinos has prompted the American Gaming Association (AGA) to advocate for more attention to the dual currency system they use, arguing that it circumvents federal and state gambling regulations.
- Despite their legal status in most U.S. states, the regulatory landscape for sweepstakes casinos is becoming more contentious, with states like New Jersey and Louisiana considering restrictions or bans due to constitutional and regulatory concerns.
- Sweepstakes casinos treat their sweepstakes currency as if it were real money, and users can redeem these virtual winnings for cash prizes, blurring the lines between social gaming and casino-and-gambling.
- The blurred lines between sweepstakes casinos and iGaming, coupled with the contention surrounding their regulation, have amplified the need for comprehensive iGaming legislation in the United States.
- The iGaming business, including casino-games, lotteries, and casino-culture, is experiencing a significant impact from the growth and regulatory challenges of sweepstakes casinos, potentially influencing future legislative decisions and the social acceptance of online gaming.
