The AGA has admitted it was only alerted to the threat of sweepstakes in November 2023 when Michigan took issue. [Image: Shutterstock.com]

AGA reacts to recent threat

An American Gaming Association (AGA) executive has admitted the operations of the under-fire US sweepstakes market only caught the US gambling trade body’s attention in late 2023. 

According to media reports, the sweepstakes market first fell under AGA’s scrutiny in November when Michigan issued cease-and-desist orders to two offshore iGaming firms. 

sweepstakes “making real money off of this”

On Wednesday, AGA’s Senior Vice President of Government Relations Chris Cylke admitted sweepstakes “hadn’t been on our radar until that point.” Cylke said after the AGA did some investigating and fielded more reports from state regulators like the Michigan Gaming Control Board (MGCB), it discovered sweepstakes are “making real money off of this.”

Cylke’s comments on the sweepstakes market came during a webinar shared with two executives from the Indian Gaming Association (IGA) also concerned with the mushrooming of sweepstakes gaming in California.

Shaky legal ground

Cylke went as far as noting the regulator’s investigations found sweepstakes markets “too risky” for regulated AGA members to offer their customers. The issue is all about the social gaming vertical’s legality.

The AGA exec stated that its members would be interested in offering the estimated $40bn market to its consumers if the legal aspect was “clear cut.”

“It’s not clear cut,” Cylke stated. 

Since the end of 2023, the AGA has been pushing for state regulators to investigate operators offering iGaming under the sweepstakes model, which allows users to play for free or through cryptocurrency purchases that sidestep regulatory requirements.

Given the ultra-competitiveness and highly regulated nature of the US iGaming market, operating outside of it is a risk many offshore operators are seemingly all too willing to take. 

“The only way some of these sweepstakes companies can get into this is they don’t have any skin in the game. They don’t have gaming licenses that would be put at risk.”

While the MGCB set the ball rolling in 2023 when it issued cease-and-desist notices to Sweepstakes Limited (Stake.us) and VGW Luckyland, other states have since heeded the AGA’s call in August for them to take action against firms using sweepstakes models to potentially bypass regulations and laws.

Offense and defense

A case in point is Curacao-based offshore iGaming giant Bovada, pressured by regulators to exit 13 US markets. Last week, Tennessee regulators hit Bovada with a $50,000 fine, and became the first US state to impose a financial penalty on the firm. 

In the corner for the defense is, however, the Social and Promotional Games Association (SPGA). Media reports cited the SPGA stance that there was “no question that social casinos with sweepstakes prizing, properly structured, are legal in most states.”