The National Council of Legislators from Gaming States (NCLGS) has unveiled a model gaming legislation draft designed as a comprehensive framework for regulating online casinos across the US.
Following heavy scrutiny of sweepstakes casinos for several months, the proposed legislation includes an outright ban on sweepstakes gaming. It also provides regulatory standards for taxation, responsible gambling, gambling advertisement, and oversight over all aspects of internet gaming operations.
An outright ban on sweepstakes casinos
Concerns over regulatory gaps in sweepstakes casino operations and predatory dangers of the so-called free-to-play model have been rampant this past year, culminating in lawsuits against some of the biggest sweepstakes companies, such as VGW. In response, the AGA published a memo to gaming regulators in this regard.
Although the sweepstakes gaming model has always been in a gray area, the AGA, in their memo released in early 2024, suggests that this presents a “prime opportunity for illegal activity and enriching bad actors.”
The draft law strictly prohibits sweepstakes games and indicates a fine of $10,000 – $100,000 for violations and up to 2 years imprisonment for repeat offenders.
A comprehensive regulatory framework for online casinos
According to the NCLGS, the model legislation aims to “establish an effective, comprehensive, and efficient regulatory framework consistent with public policy that will foster public confidence and trust in the integrity of the regulatory process and the fairness of internet gaming operations.”
One of the key provisions in the draft is a gambling tax rate of 15% – 25%. The model legislation also makes several recommendations regarding gambling payments, including banning credit cards and stipulating a daily deposit limit of $20,000. Also included is a standard wagering age of 21 years across the US and a restriction on gambling advertisements that pander to youth or include “characters, performers or influencers who primarily appeal to audiences under the age of 21.”
The draft also highlights some consistent legislation that requires reiteration, like the enforcement of money laundering (AML) protocols and Know Your Customer (KYC) procedures. It also highlights all the standard responsible gambling suggestions. Some novel recommendations include allowing state regulatory bodies to set max bet limits and limiting the number of operators a state should have.
Public review and considerations
The draft was open for public review until 31st Dec but is currently being refined, after which it will be shared with lawmakers.
The objective of the draft law is to consolidate US casino laws in all seven states to have legalized iGaming – Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia. However, it will also serve as a template for other states looking to implement online gambling laws.
A major driver in crafting this proposal is eliminating ambiguity and proving strict regulatory standards to be adhered to across the board. It’s for this reason the committee has gone with the solution to ban sweepstakes games altogether. In drafting the model legislation, the committee of legislators collaborated with regulators, gaming and legal experts, and other industry stakeholders. Contributors include Spectrum Gaming Group, Taft Law Firm, and the Massachusetts Council on Gaming and Health.
Some pushback is expected for this proposed sweepstakes ban. Other points for contention are likely to be the legal gambling age (especially in states that allow 18-year-olds to wager) and the setting of betting limits during the legislation process – a decision usually left to the discretion of individual operators.
Author: Jon Ridehalgh
Updated:
