VGW Halts Operations in Connecticut After Cease-and-Desist Order

Virtual Gaming Worlds (VGW), a major player in the sweepstakes casino industry, has ceased operations in Connecticut after the state’s Department of Consumer Protection (D) issued a cease-and-desist order. The order, sent in February 2024, accused VGW of running unlicensed gambling services, which the D claimed violated state laws and fair trade practices.

VGW, an Australian-based company, is well-known in the U.S. for its popular brands like Chumba Casino, Luckyland Slots, and Global Poker. These brands have been widely successful, making VGW a dominant force in the sweepstakes casino market. However, recent regulatory crackdowns in multiple states, including Connecticut, have forced the company to reassess its operations.

Compliance with Connecticut’s Order

In response to the cease-and-desist letter, VGW confirmed its decision to withdraw from the Connecticut market. A spokesperson for VGW stated, “Following careful consideration and analysis, we have made the decision to no longer offer our products in the state of Connecticut.” The company expressed disappointment over the decision but communicated the changes to its Connecticut player base, ensuring a smooth transition.

While VGW maintains that its games comply with state laws, it opted to suspend operations in Connecticut rather than face potential legal consequences. “We respectfully disagree with the Connecticut Department of Consumer Protection’s position and continue to believe that our social games are lawful in that state,” the spokesperson added. Despite this, VGW ultimately chose to withdraw to safeguard its stakeholders.

VGW’s departure from Connecticut is not an isolated incident. The company has faced similar actions in several other states, including Michigan, Idaho, Washington, and Montana. The Michigan Gaming Control Board issued its own cease-and-desist order last December, which prompted VGW to stop offering its sweepstakes-based games in that state. Idaho and Washington regulators have taken similar actions, further limiting VGW’s U.S. operations.

In February 2023, the Delaware Division of Gaming Enforcement also sent VGW a cease-and-desist letter. However, at the time of writing, VGW has not yet indicated any cessation of operations in Delaware. This inconsistency has raised questions about the company’s overall strategy and compliance across different states.

Regulatory Pressures on the Sweepstakes Industry

VGW’s challenges in the U.S. reflect broader concerns about the legality of sweepstakes-based gaming. The American Gaming Association (AGA) has been vocal about these concerns, calling for increased scrutiny of such operations. In an August memo, the AGA urged state attorney generals and regulators to investigate sweepstakes-based gaming businesses to ensure they are complying with local laws.

Amidst this growing pressure, several prominent social and sweepstakes gaming companies have come together to form the Social and Promotional Gaming Association. The group aims to advocate for the industry and promote best practices. Interestingly, VGW, despite being one of the largest players in the market, was not listed as a member of this new trade organization.

Despite the recent regulatory setbacks, VGW remains a key player in the U.S. sweepstakes casino market. According to a report by Eilers & Krejcik, VGW once held a commanding 90% share of the market. However, its market share has since declined to approximately 50%, partly due to increased competition and regulatory challenges.

VGW continues to offer its free-to-play games across most of North America, a segment that remains unaffected by these regulatory actions. “We have full confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,” said the VGW spokesperson, expressing optimism despite the hurdles.

As VGW navigates these regulatory challenges, its decision to pull out of Connecticut represents a significant shift in its operations. The company has made it clear that it values compliance and the best interests of its stakeholders, even if that means stepping away from key markets.

However, with growing scrutiny from regulators and a shrinking market share, VGW faces an uncertain future in the U.S. sweepstakes space.

The developments with VGW also highlight the broader issues facing the sweepstakes gaming industry. With calls for increased regulation and the formation of new trade associations, the landscape of sweepstakes-based gaming in the U.S. is rapidly evolving.

Source:

”Sweepstakes operator VGW exits Connecticut after cease-and-desist”, next.io, October 02, 2024.

”Sweeps operator VGW shuts down in Connecticut after order”, sbcamericas.com, October 03, 2024.