Sweepstakes Regulation Gets Rare Spotlight at Gaming Conference

Earlier this month, New York State Sen. Joseph Addabbo Jr. made comments that certainly raised an eyebrow or two. It was during a panel at the Saratoga Racing and Gaming Conference in New York, and the topic was sweepstakes.

This is relevant, largely because Addabbo is the sponsor of S5935, the New York anti-sweeps bill which passed the legislature in June and is sitting waiting for the signature of Governor Kathy Hochul. That signing would see the proposal become law, effective immediately.

S5935 outlaws the sweepstakes vertical, and would strike a huge blow for the format, with New York being one of the industry’s biggest markets. At the same time, more states could feel inclined to follow NY’s lead on this issue and draft up similar legislation of their own.

So for Sen. Addabbo to say you should regulate sweeps, not ban it, is surprising, mainly because his bill is about to do the latter.

Moderator on the panel at the conference, Bill Pascrell III seemed to agree with Addabbo’s sentiments:

Pascrell is a high-profile New Jersey legal and strategic advisor specializing in gaming and public policy, so he’s well placed to speak on regulation. However, Pascrell added that when it comes to sweepstakes casino operators, all he gets is “lip service”, implying these companies don’t actually want to go ahead with any such thing.

Hearing from the Sweepstakes Industry

No sweepstakes brands were represented at the conference to give their side of the story, but we’ve heard statements on this issue this year from the Social Gaming Leadership Alliance (SGLA).

That’s a sweepstakes and social gaming trade group founded by Laurence Escalante and sweepstakes giant, VGW, along with other major players like Pulsz and Modo. In a press release opposing California’s recent anti-sweeps bill in July, the SGLA said:

Taken at its word, the SGLA is very much open to discussing regulation for the industry, especially when the alternative is outright banning.

In fact, seemingly in response to news of California’s bill, VGW began charging a voluntary sales tax in some states in June; it was seen as a preemptive move to demonstrate a willingness towards compliance and responsibility.

Then, more recently, the SGLA commissioned an analysis into the potential benefits of the sweepstakes industry and California’s economy. The report from Eilers & Krejcik Gaming found that the introduction of regulation via a license fee and player purchases tax could raise “north of $200m” per year for the state.

In fact, the SGLA made another pro-regulation statement in response to the NY bill in June (it’s very similar to the California one):

And Addabbo suggested that if sweepstakes operators were serious about the idea, he’d be open to a discussion. From the press releases, it’s pretty clear that the SGLA is onboard, at least.

Addabbo Wants Fully Regulated iGaming in NY

For more context, Addabbo has been pushing for full iGaming regulation in the state of New York for years now, but not getting anywhere. We imagine that any conversation about the possibility of regulation for sweepstakes would imply regulation for traditional online gambling too, which is probably why he’s keen to discuss it.

Whether New York ultimately moves toward outright prohibition or a regulated framework remains to be seen. The former is still much more likely with the legislature-approved bill waiting for Governor Hochul’s signature as we speak.

Plus, only one bill supporting regulation of sweeps was submitted this year in the whole of the US. It came in the form of A5196 in New Jersey, but was swiftly withdrawn, and NJ actually became the latest state to outright ban the vertical only a few days ago.

But with industry players like the SGLA signaling willingness to comply, and lawmakers like Addabbo hinting at openness to discussion, there’s a ray of hope that perhaps wasn’t there before – one that balances regulation with opportunity.