Sweepstakes Showdown
Legislation in multiple states aims to curb the sweepstakes industry's growth, leaving the future of these games in question.
The Bulletin Board
THE LEDE: 2025 looks to be a fight for the survival of the sweepstakes industry.
LEGAL and REGULATORY ROUNDUP: OK sports betting unlikely; GRIT Act reintroduced; IN lawmakers oppose tax hike; NY Committee Chair on iCasinos.
NEWS: The Illinois legislature is considering numerous gambling bills, including two seeking to legalize online casinos.
VIEWS: Maryland online casino hearings appear to be making things worse.
AROUND the WATERCOOLER: Are cease-and-desist letters working?
STRAY THOUGHTS: The power of positive thinking.
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The Lede: Sweepstakes Operators Face Increased Pressure
STTP will post an expanded version of this entry as an upcoming Friday Feature column.
As I detailed in Friday’s feature column, the spotlight is currently on prediction markets. Still, a fight over sweepstakes has been steeping for over a year. After coming to a head at G2E in November, the battle is really gaining steam in 2025.
Setting aside the cease-and-desist letters from (Michigan, Connecticut, Maryland, and Delaware) just over a month into the new year, three states have introduced legislation to rein in sweepstakes:
Mississippi: SB 2510, introduced by Mississippi State Sen. Joey Fillingane, would prohibit sweepstakes online gambling sites in the state. Each violation would be a felony, subject to a $100K fine, up to 10 years in prison, and the forfeiture of assets.
Maryland: A new bill has been introduced in Maryland prohibiting online sweepstakes casinos. As Daniel Wallach noted on LinkedIn, SB 860 “proposes the license denial and/or license revocation of any person or entity that supports or promotes the operation of online sweepstakes games,” including suppliers and affiliates. Companion legislation is also in the House, HB 1140, sponsored by Del. Reic Ebersole.
Both bills will be discussed in committee hearings: SB 860 (one of 16 bills) on March 5 at 1 PM and HB 1140 on March 6 at 1 PM (one of four bills).
The bolded part above is also extremely important, as suppliers, payment processors, and affiliates could be the weak link in the sweepstakes chain.
Connecticut: The Connecticut General Law Committee introduced SB 1235, a bill to ban sweepstakes. The bill also prohibits lottery courier services, wagers on Connecticut intercollegiate teams (except for tournaments), boxing, and MMA, and restricts certain types of advertising.
A hearing to discuss SB 1235 is slated for February 14.
Then, there is West Virginia, where Attorney General JB McCuskey escalated the actions against sweepstakes companies. Sources with direct knowledge tell Casino Reports that sweepstakes operators have been served with subpoenas. Per Casino Reports, McCluskey cannot publish the subpoenas and can only comment on them after a response.
If you’re a sweepstakes operator (or a supplier or affiliate), the trend is troubling, and reading between the lines of recent remarks on LinkedIn from Howard Glaser, Light & Wonder’s Global Head of Government Affairs, there are more actions coming: “[West Virginia is] the first publicly known Attorney General investigation. We have reason to believe it will not be the last.”
Sweepstakes operators are pushing back on the claims, but they appear to be on the defensive.
The Social and Promotional Games Association (SPGA) told Casino Reports (concerning the West Virginia action):
“West Virginia Attorney General JB McCuskey is mistakenly conflating social casino sweepstakes games — a free-to-play form of entertainment enjoyed safely and legally by millions of adult Americans — with illegal real-money gambling operations. Research has found no meaningful overlap between social sweepstakes and real-money gambling. Consumers see them as different products that they engage with for different reasons.
“McCuskey’s actions do a disservice to West Virginians by ignoring the reality: Social sweepstakes are a legally compliant form of entertainment that gives players more choice, and as regards SPGA members, enables digital entrepreneurs, and creates high-skilled American jobs. Protecting consumers means embracing innovation, not stifling competition under the guise of concern.”
The SPGA also issued separate statements chastising the bills in Connecticut and Maryland and pointing the finger at their critics.
Connecticut:
“The Connecticut bill is yet another unfortunate example of anti-competitive special interests bending lawmakers to their will at the expense of innovation, small businesses, and the millions of American adult consumers who enjoy the safe and engaging mobile games social casinos offer.
“The bottom line: No legislature should dictate to American adults what they can and can’t do on their phones. Outlawing free-to-play mobile games is a shocking overreach that is an insult to the voters of Connecticut. What app will they come for next?
“Properly-operated sweepstakes are legal. SPGA members offer safe, responsibly-operated social games that never require a purchase to play or to win a prize. So, who are lawmakers seeking to protect here? No one but the entrenched casino lobby, who only win when consumers lose.”
Maryland:
“The Social and Promotional Games Association emphatically rejects the Maryland General Assembly Bill’s conflation of social sweepstakes with products that operate in illegal markets.
“This misguided legislation threatens to criminalize a marketing tool utilized daily by thousands of American businesses to promote everything from coffee to cheeseburgers to cryptocurrency.
“Social casinos with sweepstakes prizes are a legal form of entertainment enjoyed by millions of American adults. SPGA members operate within the laws governing sweepstakes promotions and uphold the highest standards of compliance, transparency, and consumer protection.
“This bill is another unfortunate example of anti-competitive special interests bending the legislature to their will at the expense of innovation, small businesses, and the millions of consumers who enjoy the safe and engaging mobile games offered by social casinos.”
Legal and Regulatory Roundup: OK Sports Betting; GRIT Act Reintroduced; IN Lawmakers Oppose Tax Hike
Oklahoma sports betting unlikely: Oklahoma tribes and Gov. Kevin Stitt are still at odds over sports betting. "The tribes all want sports betting. We have customers asking about it here on a daily basis. This is something that we need to offer our guests," said Pat Crofts, the CEO of Muscogee Nation Gaming Enterprises. However, Gov. Kevin Stitt’s office told the local press, “Any bill that only allows sports betting licenses for tribal entities is a no-go for the governor.”
Sen. Richard Blumenthal and Rep. Andrea Salinas reintroduced the GRIT Act: On Friday, Rep. Andrea Salinas and Sen. Richard Blumenthal reintroduced the Gambling Addiction Recovery, Investment, and Treatment (GRIT) Act. Per the press release, the GRIT Act is"bicameral legislation that would dedicate federal funds to studying, preventing, and treating gambling addiction in America.” The GRIT Act earmarks 50% of the federal sports excise tax revenue that is already collected “for gambling addiction treatment and research.”
Two Ohio lawmakers blast governor’s tax raise proposal: Ohio State Representatives Brian Stewart and Bride Rose Sweeney are not fans of Gov. Mike DeWine’s proposed sports betting tax increase, telling Cleveland.com, respectively, “We’ve not even finished two football seasons, and now we’re talking about quadrupling that tax?” and, “We are still realising what that actually means to the (sports betting) industry. So, I think we have a lot more vetting (to do).”
New York Assembly Racing and Wagering Committee Chair Carrie Woerner dumps cold water on online casino legislation: The road to gambling expansions in New York goes through the Racing and Wagering Committees. Longtime Chairman of the Assembly committee, Gary Pretlow (who was both an obstacle and a driver of expansions), has been upgraded to Ways and Means. His successor, Carrie Woerner touched on online casinos in a recent interview: “I think in the Assembly we’ll be taking a look at it, but I would not think that we’re ready to take that step yet. There’s a lot to look at. I know it’s out there and under consideration, and I’ll certainly take a hard look at it. We’ll see.”
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News: Illinois Hit With a Deluge of Gambling Bills
Illinois is drowning in gambling bills, including two bills that would legalize online casinos:
SB 1963, sponsored by State Sen. Cristina Castro
HB 3080, sponsored by State Rep. Edgar González, Jr.
The bills are industry-friendly, with a $250,000 licensing fee and a 25% tax rate (which is on the very low end of recent online casino efforts. If these bills gain any momentum, those numbers are likely to tick upward.
One interesting bit from the legislation is that both bills tie license renewal to workforce numbers. The legislation states, “The Board may not issue an Internet gaming license to an owners licensee or organization licensee that has reduced the size of its workforce by 25% or more since February 28, 2020." (pre-pandemic) — which, if we’re being honest, is a number that will scare the hell out of unions and is a gift horse for the VGT industry’s arguments against online casinos. STTP believes this provision is a death sentence for the legislation.
Job loss is one of the most often debated concerns around legalizing online casinos. Proposing a 25% job reduction as acceptable seems out of touch with the perspectives of unions and traditional casino operators, who are concerned about market cannibalization.
Further, as Steve Brubaker pointed out on X, “workforce” is not defined (and there will be questions around full and part-time), as well as the not-so-minor detail that six gamibling locations opened since February 28, 2020. “Their workforce on February 28, 2020, was ZERO,” Brubaker tweeted.
One bright spot is Illinois Gov. J.B. Pritzker’s recent “not terrible” statement on online gambling, which he called “worthy of consideration” for the state. The state’s looming $3 billion deficit has likely softened Pritzker’s views.
Online casinos aren’t the only gambling items on the table:
Illinois State Sen. Lakesia Collins introduced SB 1224, which would legalize DFS contests, including “against-the-house” pick-em-style contests.
A competing bill, sponsored by State Sen. Bill Cunningham, SB 2145, would create new, untethered mobile sports betting licenses with a licensing fee of $15 million and require licensing for fantasy sports operators, with a tiered tax rate between 20% and 40%, depending on GGR. The bill also raises the DFS age to 21.
Another bill, SB 2398, sponsored by Cunningham, would “prohibit a sports wagering licensee from using artificial intelligence to: (1) track the sports wagers of an individual; (2) create an offer or promotion targeting a specific individual; or (3) create a gambling product.”
Cunningham also filed SB 2399, which would limit bettors to five deposits in a 24-hour period, prohibit credit cards, and require affordability checks on anyone depositing $1,000 in a 24-hour period or $10,000 in a 30-day period.
News: Maryland iCasino Hearing Is Increasing the Divide
After a testy January hearing in the Senate Budget and Taxation Committee ended in what can best be described as an impasse, the Maryland House Ways and Means Committee took control of the reins yesterday, to convince the legislature that legalizing online casinos is in their best interests.
Last month’s Senate hearing discussed Sen. Ron Watson’s SB 340. Del. Vanessa Atterbeary’s bill, HB 17, was the focus of the hearing in the House Ways and Means Committee.
As in the Senate, cannibalization was the central theme, and rather than bridging any divides, the hearing seemed to make things worse.
The Innovation Group, which launched a contentious debate about cannibalization with its report prepared for the Maryland Lottery and Gaming Control Commission last year, has returned. This time, they have increased their cannibalization projection from 10% to 16%, which, as I said on X, is bound to go over swimmingly within an increasingly divided industry.
How bad was the hearing? As SBC Americas reports, at one point, Atterbeary (the bill’s sponsor and committee chair) countered Cordish Companies concerns by saying, “OK, so then we should be put in the legislation that all of the brick-and-mortars get a license except Live. Maybe that should go in since it’s such a detriment to the state of Maryland. Perhaps that’s what we should do.”
Cordish isn’t the only casino operator opposed to online gambling. Penn Entertainment once again opposed the bill as written, as it did in the January hearing. Penn’s support appears tied to land-based casinos having exclusive access to online licenses. MGM submitted written testimony expressing similar concerns, per SBC.
Bottom line: Maryland’s chances to pass an online casino bill in 2025 are growing slimmer by the day.
STTP will examine both sides of the cannibalization argument in an upcoming feature column.
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Around the Watercooler
Social media conversations, rumors, and gossip.
A compelling piece of data from GeoComply (a newsletter sponsor) indicates that the cease-and-desist letters sent to Bovada and other offshore sportsbooks are having a positive impact on the legal market:
“In states where regulators have taken action against illegal offshore sportsbooks—leading some operators to stop accepting customers—GeoComply observed that the growth rate of active accounts among its sportsbook customers was, on average, twice as high as in states that have not taken similar enforcement measures. This highlights the impact of these efforts to help convert bettors to the regulated market.”
Anna Sainsbury, CEO and Co-Founder of GeoComply, was quoted in the media advisory as saying: “When states take enforcement action, we see a correlation with increased engagement on our customer’’ platforms. More fans are choosing legal sportsbooks, driven by stronger consumer protections and enhanced user experiences. This means even greater tax revenues to support local communities and promote responsible growth while reducing reliance on illegal sportsbooks.”
Stray Thoughts
I really enjoy the Diary of a CEO podcast.
A recent episode with Dr. Daniel Amen, a psychiatrist and brain disorder specialist, was quite interesting, particularly the part at about 45:00 about the power of positive thinking and programming your brain to look for what is going right and not hyper-focused on what went wrong: “You have to tell your brain what you want, and then your brain will figure out how to get it.”
There is a caveat. You can’t be irrationally positive.