The American Gaming Association (AGA) has issued a memo calling for a crackdown on sweepstakes-based gaming offerings.
The US gaming trade body called on gaming regulators and state attorney generals to investigate companies offering gaming under the “sweepstakes” model to ensure their compliance with the law.
This call to action follows the rise of many businesses using state sweepstakes laws to offer iGaming and sportsbook-style games to consumers.
The trade body urged state legislatures to consider passing new laws to prevent sweepstakes-based operators from offering effective real-money gaming.
Due to the lack of regulatory oversight, the AGA argued, current sweepstakes-based platforms present risks to the consumer and challenge the economic integrity of the legal market.
The lobbying organisation said these operators have weak responsible gaming protocols, and few, if any, self-exclusion processes.
No independent product testing exists to ensure player fairness, it added, and player age verification processes are also often dubious.
The trade body added: “The opaque nature of these operations also presents a prime opportunity for illegal activity and enriching bad actors.”
AGA argues sweepstakes casinos real-money gaming
The AGA also highlighted the different regulatory frameworks that sweepstakes casinos operate under compared to social casino games.
Sweepstakes casinos utilise a dual currency system to offer players the chance to exchange in-game currency for real money and prizes, it outlined.
This contrasts with the more casual social casino games that resemble gambling-style games, but ultimately have a closed loop economy where rewards cannot be redeemed for real-world currency.
“Social casino games are typically played for entertainment in short time bursts while sweepstakes casinos are often marketed as a gaming experience where players can redeem winnings or earn cash prizes or gifts,” the AGA said.
In November and December 2023, Michigan already took action against sweepstakes casinos by sending cease-and-desist letters to two companies operating under the model.
These businesses were Cyprus-based Sweepstakes Limited, trading as Stake.us, and the Australia headquartered VGW Holdings.
After the Michigan Gaming Control Board’s (MGCB) warning, the operators opted to halt their operations in the state.
The letters detailed the MGCB’s concerns, which included promoting an unlicensed lottery or raffle and conducting illegal gambling.
