American Gaming Association Releases New Policy Against Sweepstakes Casinos

The American Gaming Association (AGA) has issued a strong statement opposing the rise of sweepstakes-based wagering models, as these platforms continue to gain traction in the online gambling world. The AGA’s new policy statement highlights significant concerns about the lack of regulation and the potential risks these models pose to consumers and state economies.

Sweepstakes casinos and sportsbooks have gained popularity by offering a unique format where s can play for “free” or purchase virtual currency to enhance their gaming experience, with the possibility of winning cash prizes. While sweepstakes operators argue that their dual-currency system is legal under current sweepstakes laws, the AGA warns that these platforms may be exploiting loopholes to avoid regulatory oversight and taxation.

AGA’s Stance on Regulatory Oversight

In its policy statement, the AGA emphasized the dangers posed by the unregulated nature of sweepstakes gambling. “The lack of regulatory oversight presents many risks for consumers as well as the integrity and economic benefits of the legal gaming market through investment and tax contributions,” the AGA stated. The organization is concerned that these operators often lack responsible gaming protocols and self-exclusion processes, leaving players vulnerable to the dangers of gambling addiction.

The AGA is urging regulators and lawmakers to take action against sweepstakes operators, calling for investigations to determine whether these businesses are complying with state regulations. If existing laws are unclear, the AGA recommends that legislators introduce new legislation to close any loopholes that allow unlicensed operators to conduct real-money gambling under the guise of sweepstakes.

Several states including enforcement mechanisms.

Michigan has also taken a firm stance against VGW and other sweepstakes operators. The Michigan Gaming Control Board (GCB) ordered VGW to stop its sweepstakes operations in the state, accusing the company of violating multiple gaming laws, including the Michigan Penal Code, the Lawful Internet Gaming Act, and the Michigan Gaming Control and Revenue Act. The GCB’s cease-and-desist order cited VGW for “conducting illegal gambling by offering an internet game in which a player wagers something of monetary value for the opportunity to win something of monetary value.”

Despite these enforcement efforts, sweepstakes operators like VGW continue to seek new markets. According to research by Eilers & Krejcik, player purchases on sweepstakes platforms are projected to reach approximately $8.5 billion in 2024, highlighting the growing financial stakes involved in this controversial sector.

The Growing Threat of Sweepstakes Casinos

The rapid expansion of sweepstakes casinos is alarming both regulators and industry observers. A recent report from Eilers & Krejcik estimates that the sweepstakes market will reach $5.6 billion in 2023, representing a 66% increase from the previous year. By 2025, the market could explode to over $11 billion, further complicating efforts to regulate these platforms.

Sweepstakes proponents often compare their model to traditional promotional games, such as McDonald’s Monopoly promotion, where consumers can win prizes by making a purchase. However, the AGA and other critics argue that this comparison is misleading, as sweepstakes casinos allow s to wager significant sums of money with the potential for substantial losses.

The influx of private equity funding into the sweepstakes sector adds another layer of complexity. Investors are betting that states will be slow to crack down on these operators, allowing them to generate quick profits before regulators catch up. Alternatively, they hope that sweepstakes will become so entrenched that states will have no choice but to accept their presence.

AGA Calls for Urgent Action

The AGA’s policy statement serves as a call to action for regulators, lawmakers, and industry stakeholders. By taking a proactive approach to regulating sweepstakes casinos, states can protect consumers, preserve the integrity of the legal gaming market, and ensure that tax revenues are not siphoned away by unregulated operators.

As the AGA warns, “The opaque nature of these operations also presents a prime opportunity for illegal activity and enriching bad actors.” The organization believes that swift action is necessary to prevent sweepstakes casinos from further undermining the legal gambling landscape in the United States.

Source:

”New anti-sweepstakes policy released by American Gaming Association”, sbcamericas.com, August 22, 2024.

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