State senator, Joe Addabbo has announced his intentions to push for a ban on online sweepstakes casinos in New York state. This is in tandem with his repeat proposal of a bill to legalize online iGaming and poker.
Speaking recently on an episode of a City & State podcast, Addabbo framed sweepstakes sites as operating via a ‘loophole’.
“To close this loophole, I will work to ban or incorporate Sweepstakes Casinos in the state, akin to current laws in Michigan, Idaho, and Washington, and I will push for iGaming as a safe, effective alternative for online casino enthusiasts.”
Addabbo is chair of the state’s Senate Racing, Gaming, and Wagering Committee, and his proposed bill is filed under Senate Bill S2614. The reasoning for wanting to shift players away from sweeps sites includes protection from gambling addiction, along with raising more revenue for the state via taxation (New York is currently experiencing a budget deficit).
Sweepstakes sites are often perceived to be offering online gambling without proper licensing, or without paying the appropriate levels of tax – levels which are intentionally set higher than for standard businesses. For example, in Addabbo’s proposed bill, licensed online casinos in NY would pay a 33.5% tax rate.
This all comes at a time when courts and lawmakers across the US are wrestling with the runaway popularity of sweepstakes casinos. Alongside this, we’re seeing other states – such as New Hampshire and Hawaii – considering similar bills to legalize online iGaming.
Addabbo wants to extend the invitation for online licensing to current and forthcoming casinos, tribal casinos, VLT parlors, and online sports betting operators in NY state. His bill would also exclude unregulated companies from applying for a license for at least 3 years, something which seems to be aimed at sweeps casinos. That said, with this being the fourth year in a row of the same proposal, some argue the chances of it passing this time are still low.
Many sweepstakes sites are registered in the US but operate without a license for the states they serve. Other sweeps businesses are not registered in the US at all, choosing to headquarter in other countries like Malta.
However, sweepstakes casinos do operate within a legal framework based on current sweepstakes laws. Instead of real money betting, Gold Coins and Sweepstakes Coins with no inherent value are played on games. While Sweepstakes Coins can be redeemed for real cash, they can never be bought, only won; this is enough to make the system legal in most US states.
Lawmakers and regulators like Addabbo argue that this model skirts the spirit of gambling laws. There have also been arguments that sweepstakes sites cannibalize the traditional casino and iGaming industry, but they have been debunked.
Lawmakers and state gaming boards are having to find other ways to intimidate and chase sweepstakes operators out of their state, such as sending cease and desist letters like the recent case of Maryland. However, there has still been no conclusive legal judgement against the sweepstakes casino model in the US. Until that happens, the industry will continue to grow year on year.
Author: Alex Windsor
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