New Jersey Assemblyman Clinton Calabrese has introduced A5196, seeking to regulate the sweepstake casino industry.

The amendment simply supplements the existing state legislature by adding online sweepstakes casinos to the gambling entities requiring regulation.

Calabrese’s amendment defines online sweepstakes casinos as follows: 

“Online sweepstakes casino’ means any platform available via an Internet website or mobile application that (1) provides participants with an opportunity to play authorized gambling games or provides an experience equivalent to, or with similar statistical odds of winning as an authorized gambling game, except that the game does not require any initial monetary investment on behalf of the participants to play and instead is played primarily with free currency; and (2) awards to participants at random, as a bundle with the purchase of free currency, or upon the completion of certain specified tasks, currency or promotional gaming credits which can be wagered on games and are redeemable for cash, prizes, or other things of value. An online sweepstakes casino may additionally offer tokens, coins, chips, credits, or other forms of currency for purchase or exchange that are directly redeemable for cash, prizes, or other things of value.”

If passed, the bill would require any operator of an online sweepstakes casino to obtain a casino service industry enterprise license from the State of New Jersey. It further states that  the company must submit an independent third-party audit ‘to determine the integrity of its operations and its financial standing as a condition of receiving an initial license.’ Operators would also have to submit updated audit reports bi-annually to remain licensed. 

In addition, it would align sweepstakes casinos with all other forms of internet gaming. Under current law, online casino gaming operators must partner with a brick-and-mortar casino licensee, which would also apply to sweepstakes. 

The New Jersey Division of Gaming Enforcement would be empowered to collaborate with federal, State, and local law enforcement agencies to investigate and sanction unlawful online sweepstakes casinos. The penalties would be consistent with those of other internet gaming operators, who are subject to fines of $1,000 per player per day for making their premises available for placing wagers at casinos using the internet and $10,000 per violation for advertising as such. 

The current tax rates in New Jersey on online sports betting are 13% and 15% on online casinos. 

The Social and Promotional Games Association (SPGA), an industry group, has welcomed the bill, stating, “The SPGA welcomes Assemblyman Calabrese’s bill. The SPGA and its members are advocates for clear regulations that enable transparent, innovative, and responsible social and promotional gaming experiences.” 

It continued, “The bill aligns with our core objective of reinforcing the well-established legality and legitimacy of social sweepstakes games, which millions of American adults enjoy.”