A Regulatory Framework For Sweepstakes

In what looks like a plea for regulation, sweepstakes proponents are working with regulators to counter the recent spate of criticism directed at the industry.

Oct 23, 2024

NEWS: Sweepstakes are under fire, and the SPGA is presenting its case.
QUICK HITTER: Hold your horses: That UK tax hike is unlikely, at least at the reported level.
NEWS: Alberta’s launch timeline plus potential player pooling with Ontario.
VIEWS: Poker’s brief period of “cool.”
AROUND the WATERCOOLER: Was the legalization of mobile betting the worst policy decision of our time?
STRAY THOUGHTS: Poker on the mind.

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Sweepstakes Are Ready to Make Their Case

The Social and Promotional Gaming Association (SPGA) was formed to respond to growing criticisms of sweepstake operators and remove some of the legal ambiguity around the sector. How this will end is anyone’s guess. However, based on recent actions and comments and the history of gray market products, we can intuit what sweepstakes operators are discussing with regulators.

Sweepstakes aren’t the only product whose legality is in question. As I wrote last September when DFS 2.0’s legality was the topic du jour:

“This isn’t an issue exclusive to DFS. Sweepstakes gambling sites, Texas poker rooms, VGTs, skill games, Freemium social casinos, and an assortment of other gambling (or quasi-gambling or gambling adjacent) products exist because US gambling laws allow them to exist.”

Some of these products fill a void (DFS pre-PASPA repeal, Texas poker rooms, or HHR machines in slot deserts), and others compete side-by-side with a similar regulated product (VGTs or DFS post-PASPA repeal).

Sweepstakes (and DFS 2.0) fall into both buckets, as they operate in place of and alongside licensed online sportsbooks and casinos.

They all have one thing in common: they welcome regulation (provided it’s fairly light touch). Given the option, most operators in the gray space would agree to some level of regulation/taxation for legal clarity. No one wants to pay more taxes, but it’s preferable to uncertainty—is today the day we get a cease-and-desist letter?

Recent statements to Compliance+More indicate this is the SPGA’s strategy, as a spokesperson essentially laid out the regulations its members would be happy to agree to.

Per C+M, the spokesperson “confirmed its members are working with regulators to tackle consumer protection and transparency concerns " and is developing an SPGA Code of Conduct, “including age verification, KYC, geolocation and AML policies.”

This feels like the framework for regulation, but the overarching question of why these operators are not subject to the same gambling taxes and regulations that casinos and licensed operators are still needs to be answered.

The Sports Betting Alliance’s Jeremy Kudon will join the Indian Gaming Association’s New Normal Webinar today at 1 PM EST to discuss sweepstakes — you can register here.

Quick Hitter: Cold Water Thrown On UK Tax Hike

Remember the UK tax rate increase from last week? It appears that (as I and others suspected) the proposal to double the tax rate on online gambling is unlikely, at least in the eyes of Culture Secretary Lisa Nandy, who went to bat for the industry, per reporting from The Independent:

The Government are “committed to reviewing all of the available evidence” and is “committed to reviewing all of the available evidence” in order to strike the right balance between ensuring the gambling industry can “thrive” and supporting those suffering from problem gambling.

Still, Nandy mentioned balance several times, which suggests a tax increase is on the table, just not to the degree proposed last week.

As I suspected in my writeup last week:

“Before I get too deep into this entry, let me be clear that I don’t foresee a doubling (or more) of the tax rate. It could happen (for the reasons outlined below), but a more likely outcome is a smaller bump. Still, nothing would surprise me anymore.”

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Timeline to Regulated iGaming in Alberta

Any hope of a quick launch of regulated online gambling in Alberta is dead and buried.

In an interview with Covers.com’s Geoff Zochodne following G2E, Minister of Service Alberta and Red Tape Reduction Dale Nally said that while he is bullish on a Fall 2025 launch, “At the end of the day, I don’t know the date.”

So what still has to happen?

According to Nally:

“What I can commit to is we’re going to put the legislation in the spring. And once we do the spring legislation, then we’ll write the regulation. So anytime thereafter. In fairness, I can’t tell you it’s going to be August, September, October, November, but I’m pretty confident that we’re going to be able to say 2025 we’ll be able to offer a legal, regulated space for iGaming.”

Nally expects Alberta’s regulated market to resemble Ontario’s in that it will be open and competitive. However, who the market will include has yet to be determined, and it is unlikely to be determined until the Spring. As Nally said, “In the end, we decided we wanted to have enabling legislation in place before we went forward with the [operator] contracts.”

Alberta also plans to link up with Ontario for online poker and other games.

Per a separate article from Zochodne (a go-to for Canadian developments):

“Service Alberta and Red Tape Reduction Minister Dale Nally told Covers last week that the Western Canadian province plans to pool liquidity with Ontario when Alberta launches its competitive market for online sports betting and casino gambling… “We’re going to join Ontario in terms of liquidity and hopefully have similar, like-minded provinces follow suit,” Nally said in an interview in Las Vegas.”

Memory Lane: When Poker Was “Cool”

For a very brief moment (2003 to somewhere between 2006 and 2011, depending on who you ask), poker was cool.

When I was growing up, poker was far from cool. When I started playing poker in the late-1990s, poker was far from cool. There were two versions of poker: kitchen table poker, played by friends and family at gatherings, and gambling poker, the domain of middle-aged, middle-class men on Friday nights or in bars.

The old World Series of Poker broadcasts from the 80s and 90s were not filled with what one would call pop culture icons. These were bookish (or somewhat sketchy) looking men with little personality.

I make this point often, but when I played in cardrooms pre-Poker Boom, I would bring the average age of the table down by at least a decade.

2003 changed everything. ESPN covered the tournament from the opening to the closing bell and managed to find some actual characters, including some “cool” people. With the help of Rounders, poker suddenly became cool. Poker was all over TV and was seen as a path to potential fame and riches.

That period didn’t last very long because, at its core, poker is a very bookish pursuit. Don’t get me wrong, there are plenty of exciting and “cool” people in the poker community, but Gen Z isn’t looking at poker like Millennials did in 2004… Why play poker when you can become an influencer?

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Around the Watercooler

Social media conversations, rumors, and gossip.

More sports betting takes in the wild, this time from New York Times Magazine contributor Ross Barkan, who tweeted:

As always, go through the replies and retweets, like the following:

Stray Thoughts

Poker may not be “cool” anymore, and “there’s no money in poker” is a common refrain amongst online gambling legalization supporters, but there sure is a hell of a lot of interest, considering this graphic from the BetMGM team.

Per BetMGM, the research is based on Google Trend data between Jan 1st - Oct 9th, 2024.

Interestingly, poker is the runaway leader, with roulette, blackjack and other table games far behind poker and slots.