Sweepstakes casinos, also known as social casinos, are under pressure. After exploding in popularity during the COVID-19 pandemic, these unique casino sites have been allowed to operate in the US under little to no scrutiny. The reason for this is simple: sweepstakes casinos don’t use real money. Instead, they use virtual ‘sweeps coins’ which (in the eyes of the law) have no real-world value and therefore can’t be classed as a gambling currency. However, sweeps coins can be exchanged for real prizes, such as cash transfers and gift cards. This means players still get to enjoy a legitimate online casino experience, while sweepstakes operators are able to bypass US gambling laws.
For several years, popular sweepstakes casinos like Chumba Casino, WOW Vegas, and Stake.us have had complete market freedom. Naturally, this has been great for them, with Chumba Casino alone having over 1 million monthly users. But now, it seems like some major changes could be on the horizon. This is because the American Gaming Association (“AGA”) has suddenly called for action against all sweeps casinos.
Could this mean the end for sweepstakes casinos as we know them? Possibly. Let’s take a closer look.
19 August 2024: The AGA Calls for a Crackdown on Sweepstakes Casinos
On 19 August 2024, the AGA issued a public statement calling for state regulators in the US to crackdown on sweepstakes casino operators:
“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. These sweepstakes-based operators have weak (if any) responsible gaming protocols and few, if any, self-exclusion processes.”
- AGA (Policy Statement)
Essentially, the AGA, a trade group in the US gambling industry, wants state regulators to conduct an investigation into sweepstakes casino sites that adopt the popular sweepstakes currency system. Through investigation, the end goal for AGA is that sweepstakes operators will then be subject to the same gambling laws and regulations as traditional online casinos, lottery sites, and sportsbooks, which sweepstakes casinos currently aren’t. In the eyes of the AGA, the sweepstakes model is designed to circumvent state-by-state gambling laws, which means states are losing out on tax revenue and traditional gambling sites aren’t getting a fair deal.
Which States Are Sweepstakes Casinos Legal?
Currently, sweepstakes casinos are legal in 48 out of 50 states in the US, with only Washington and Michigan opting to ban them. On the other side of the fence, traditional online casinos are only legal in 6 states. This has created an imbalance, as sweepstakes casinos have a huge advantage due to their increased accessibility and the fact they’re not subject to as many state regulations. And with most sweepstakes casinos recently exploding in popularity, such as the Drake-endorsed Stake.us, it’s no surprise that there’s a sudden push for sweepstakes operators to face harsher laws and regulations.
Are Sweepstakes Casinos Really Gambling Sites?
The big point of discussion surrounding sweepstakes casinos has always been whether they’re genuine gambling sites or not. In the eyes of the AGA, they are. However, for a long time, state regulators have not viewed them as legit gambling sites. Following the AGA’s recent policy statement, though, a re-review of sweeps casinos is almost certainly going to happen.
There’s a strong argument you can make that sweepstakes casinos aren’t gambling sites. When you create an account with a site, you play using sweeps coins, which have no value in the real world (whereas traditional online casinos use real currencies like the USD and GBP). From a purely technical standpoint, this means you’re not gambling. However, the catch is that you can only get sweeps coins by depositing real money in exchange for them. For example, with Chumba Casino, you can pay money for gold coin packages that typically include sweeps coins as add-ons. Then, if you win enough SC while playing slots, roulette, and the other casino games on offer, you can redeem the coins for very real prizes, like cash transfers and cryptocurrencies.
This is something that Alex Windsor, analyst from sweepstakes casino experts sweepstake-casinos.com, has provided insight on:
“Smartly, sweepstakes casinos substitute real money for virtual coins. What this allows them to do is legally operate in most US states. Of course, the argument can be made that because these coins can be exchanged for real cash prizes, it means that all sweeps casinos should be classed as gambling sites. But the issue with that argument is that the coins are 100% virtual and have no value outside of the sites themselves. So, just from a purely legal perspective, sweepstakes casino games can’t be classed as a legitimate outlet for gambling.”
- Alex Windsor, Sweepstakes Casinos
Will Sweepstakes Casinos Be Banned?
Following the AGA’s demand for a crackdown on sweepstakes casinos by state regulators, there’s now a strong chance that changes will be made to the law in the future. These changes could potentially mean that sweepstakes casinos face the same state laws and regulations as regular gambling sites, which would send shockwaves through industry. In this case, players would still be able to access sweepstakes casinos, but only from specific states.
There’s even talk that sweepstakes operators could be outright banned by individual states who make the decision to do so. However, this is extremely unlikely, as it would block states from collecting huge amounts of tax revenue. After all, sweepstakes casinos are extremely popular and make millions of dollars through in-site purchases, so state regulators would be harming themselves in this respect.
Typically, players must be aged 18 or over to play inside online sweepstakes casinos. Whether this age is changed or altered moving forward will also be a topic of discussion. More players than ever are making the switch to sweeps casinos from traditional online casinos, so this might be something that regulators decide to examine, too.
Are Sweepstakes Casinos Safe?
Yes. Officially licensed sweepstakes casinos are 100% safe, which is why they’ve become popular in the iGaming community and are legally allowed to operate in 48 out of the 50 US states. To be extra safe, though, it’s always recommended you check that your chosen sweepstakes casino has official licensing along with trusted reviews. This way, you can have the best time possible and get the most out of your sweepstakes experience without putting your account at risk.
Conclusion
The future for sweepstakes casinos will be extremely interesting. The likes of Stake.us and WOW Vegas are currently booming with new users, while the AGA is calling for these sites to face stronger laws and regulation. For now, though, things will remain the same. However, some big changes for sweepstakes state laws could come over the next few years, especially if state investigations conclude that they should be classed as gambling sites.