Anti-sweepstakes proposal, House Bill 4410 is advancing through the Minnesota House after being heard in committee.
However, it wasn’t without opposition from stakeholders in the sweepstakes space, with testimony presented by Patrick Fechtmeyer, CEO of ARB Interactive (pictured above) and Lexi Morgan of sweepstakes industry group, the Social Gaming Leadership Alliance (SGLA).
We reported on the filing of SB 4474 in MN earlier this month, a 2-page proposal to define and outlaw the sweepstakes casino vertical in the state; it has a companion bill in HB 4410, and both are, in fact, making progress through committees.
Industry Groups Raise Concerns Over Unintended Consequences
Both bills target the “dual currency” systems of online sweepstakes games, a format used by ARB Interactive, the operator of sweeps casino, Modo.us.
ARB’s CEO, Fechtmeyer is also a native Minnesotan, and he used this point in his testimony to the House Commerce Finance and Policy Committee during discussion over HB 4410:
“I would like to address one mischaracterization of social gaming – off the bat, we’re not offshore. I sit before you as a Minnesotan. I grew up here. I went to high school in Minneapolis, and I attended the University of Minnesota’s Carlson School of Management.
This state shaped how I think about business responsibility and community. It’s why I care deeply about getting this right.”
Fechtmeyer went on to argue that – despite many sweeps operators upholding the same standards as real money online casinos – bills like this will drive players into the arms of offshore sites, if sweepstakes gaming becomes unavailable to them.
Fechtmeyer asked that stakeholders be allowed to come together and create “a thoughtful, balanced solution that respects where technology is going over the next 20 years”.
This was a sentiment echoed by Lexi Morgan, representing the SGLA, a trade group which ARB Interactive is a member of. Morgan said:
“We want to engage with the state and a regulatory and taxing framework, which could generate significant revenue for the state. Social plus games [sweepstakes games] do not compete against casinos and charitable organizations.
The way people participate in these games is entirely different than real money gambling. No money or consideration is ever required for a player to enter the sweepstakes. More than half of the participants never spend any money to play these games.”
The bill’s main sponsor, Representative Gregory Davids, admitted that the bill was “somewhat aggressive”. He also added:
“What I want to be able to determine is who’s operating legally, who is not operating legally, and let’s go after the ones that are not operating legally…That being said, members, I’d appreciate your support to get this to Public Safety to continue working on this.”
Davids’ statement seems to reflect the stance of the MN state gaming regulator, which sent letters to more than 20 sweepstakes and offshore operators last year. However, without new legislation, enforcement options remain limited.
It should also be emphasized again that sweepstakes casinos and offshore gambling sites are fundamentally different business models, but some lawmakers lump them into the same category.
Tribal Gaming Group Voice Support for HB 4410
A statement for the bill also came from Andy Platto, Executive Director of the Minnesota Indian Gaming Association (MIGA). Platto argued:
“Sweepstakes casinos use a deceptive dual currency model to claim legality, but these are casinos for real money without any authorization from the state.”
MIGA has a vested interest in the bill passing and classifying these games as illegal as it would reduce competition, likely protecting revenue for the tribal land-based casinos of Minnesota.
For now, both Senate File 4474 and House File 4410 now move on to their next committees – the Senate Judiciary and Public Safety Committee and the House Public Safety Finance and Policy Committee, respectively.
However, time is of the essence, as under Minnesota’s legislative rules, bills must pass all assigned committees in their originating chamber by March 27 (tomorrow) to remain eligible for a floor vote. That means, by this weekend, both bills must clear these committees or risk failing this session.
Author: Joseph Allen
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