A senate committee in New York has voted unanimously to ban online sweepstakes gaming: an area of iGaming that has come under scrutiny in recent months with critics saying that it flouts the law and exists in a legally grey area. The bill describes sweepstakes sites as offering dual-currency gaming. Because the sites use virtual coins that can be converted to cash prizes later, they have not been prohibited by existing laws. However, legislation S5935 could change that.
Currently, New York does not have regulated iGaming. Players within the state use offshore casinos as well as trusted mobile poker rooms, which offer cash games and tournament games with players from around the world. According to poker expert Jeffrey McMillan, these apps can be used from anywhere in the US to access live poker games. New York players are also able to use online sweepstakes sites, although that looks likely to change following moves in the Senate.
Bill S5935 was tabled by Sen. Joseph Addabbo and passed by the New York Senate Racing, Gaming, and Wagering Committee. The bill not only prohibits sweepstakes from offering services to players in the state but also prohibits financial institutions and other groups from facilitating their activities. Fines of between $10,000 and $100,000 could be levied under the new legislation.
An accompanying bill in the Assembly has been put forward by Carrie Woerner but has not yet advanced.
Sweepstakes casinos offer typical casino games like roulette, blackjack, craps, and slot machines. Players can receive free virtual coins by email or in the post, or they can buy additional coins. They then use these sweepstake coins to play the games with prizes being awarded in sweepstake coins. The player can then use these coins to buy other prizes, which may include physical prizes like gadgets and electronics.
A lot of sweepstakes casinos also offer cash prizes, though. Critics have pointed to the fact that players can effectively treat sweepstakes casinos just like any other online casino. Because they aren’t regulated, sweepstakes casinos do not necessarily offer the same safeguards as traditional online casinos, although these are also not regulated in the state yet.
Sweepstakes casinos do typically have to follow certain regulations, but these are not as strict as traditional online iGaming regulations, and these types of sites operate in many states where online gambling has not yet been regulated. Players must be able to access free sweepstakes coins but, while there are a couple of extra steps required for players to gain access to winnings, the sites have become more advanced, providing access to more and more games and better prizes.
There have been calls to legalize online casinos in New York, although the state is currently proceeding with the issuing of new retail casino licenses and they may be waiting for this process to complete before they consider moving forward with online gambling regulations.
The state has three new casino licenses up for grabs, and there are currently 11 major proposals that have been put forward by groups hoping to snap up the potentially lucrative licenses. Some movement on the licenses is expected this year, although it would likely take several years for the casinos to be completed, even after agreements are reached.
New York isn’t the first state to take action against sweepstakes casinos. Maryland, New Jersey, Connecticut, and Mississippi have passed or are in the process of passing similar bills to prohibit the running of these sites.
