The American Gaming Association (AGA) is calling on state regulators and attorneys to investigate sweepstakes games that may be operating in violation of US gaming regulations and laws. The AGA has expressed concerns about the potential for illegal activity and the enrichment of bad actors in the market.
In a memo sent out last week, the AGA urged state officials to take action against firms using “sweepstakes-based” models that could bypass regulations designed to protect consumers in legal online gaming markets. The memo emphasized the importance of regulatory vigilance in addressing the threat posed by sweepstakes games.
Specifically, the AGA is concerned about operators offering iGaming under the sweepstakes model, which allows users to participate for free or through virtual currency purchases that may circumvent regulatory requirements. The use of a dual-currency model enables operators to avoid licensing and regulation, depriving states of tax revenues and consumers of protections found in regulated markets.
The AGA clarified the difference between sweepstakes and social casino platforms, noting that social casinos operate as a “closed loop economy” where customers cannot exchange rewards for real-world value. The organization is advocating for states to take action against sweepstakes games that mimic real-money online games while operating outside of regulatory frameworks.
Howard Glaser, Light & Wonder’s Global Head of Government Affairs and Legislative Counsel, endorsed the AGA’s stance, warning that consumers may be lured into illegal online casino gaming by deceptive sweepstakes models. Glaser cautioned that consumers could face serious consequences if they incur gambling debts to deep-pocketed operators backing these online gambling dens.
Several states have already taken action against offshore sweepstakes operators, including sportsbook companies. The Michigan Gambling Control Board issued cease-and-desist orders to three sweepstakes firms last year, prompting other states like Connecticut, Massachusetts, and West Virginia to follow suit. Offshore sportsbook operator Bovada has also faced regulatory action in multiple states, resulting in its withdrawal from several markets.
AGA CEO and President Bill Miller commended Michigan for its proactive approach to addressing illegal gambling activities and encouraged other states to take similar action. The organization is urging state regulators and attorneys to investigate and crack down on sweepstakes games that may be operating in violation of gaming regulations and laws.