The AGA has urged states to take action against sweepstakes firms that bypass US gaming regulations and laws. [Image: Shutterstock.com]

AGA takes aim

The American Gaming Association (AGA) wants regulators and state attorneys to investigate sweepstakes games, stating the shadiness of the market “presents a prime opportunity for illegal activity and enriching bad actors.”

potentially bypass regulations and laws

The trade body sent out a memo last week calling on the principals to probe and take action against firms using “sweepstakes-based” models to potentially bypass regulations and laws designed to protect customers of legal online US gaming markets.    

The first three words of the memo’s title: “Regulatory Vigilance Critical,” underlines the the AGA’s sense of urgency and how seriously it sees the threat sweepstakes pose to consumers and gaming regulation.

Essentially, the AGA wants principal state actors to take action against sweepstakes games aping legal real-money online games while depriving states of tax revenues and consumers of protections found in the regulated market.

Real-money hustle

In particular, the AGA wants the main state players to investigate operators offering iGaming under the sweepstakes model that enables users to participate for free or via virtual currency purchases that sidestep regulatory requirements.

When customers exchange virtual for real money, the dual-currency model enables operators to bypass licensing and regulation, stated the AGA.

The AGA also clarified the difference between sweepstake and social casino platforms. Whereas the former dual-currency system allows for cashouts, social casinos are a “closed loop economy” in which customers cannot exchange social casino rewards for “real world value.”

Legal Sports Report, meanwhile, cited Light & Wonder’s Global Head of Government Affairs and Legislative Counsel Howard Glaser as endorsing the AGA’s stance, with the global gambling supplier exec adding he expects other firms to follow suit.  

Glaser said that while sweepstakes sounds a harmless term, the original concept of the model has been “weaponized to lure unsuspecting consumers into full blown online casino gaming which is otherwise illegal in 44 states.”

enforcer who wants to seize your house for gambling debts”

The Light & Wonder chief added that if customers “lose enough to the deep-pocketed vulture capital firms bankrolling these online gambling dens,” then, rather than a “kindly Ed Mahon” type paying a call, it will be an “enforcer who wants to seize your house for gambling debts.”

States taking on offshore sites

The AGA’s memo won’t catch some states completely by surprise, however, as several have already taken action against offshore sweepstakes operators, including sportsbook companies.

The Michigan Gambling Control Board (MGCB) late last year ordered three sweepstakes firms, PredictionStrike, Stake.us, and VGW Holdings, to stop offering their products in the state, an order with which the three have since complied.

In May, the MGCB hit offshore sportsbook operator Bovada with a cease-and-desist order, with Connecticut, Massachusetts, and West Virginia following suit in June. According to the firm’s website, Bovada is now unavailable in the above four states, plus ten others and Washington, D.C.

AGA CEO and President Bill Miller in May praised Michigan for taking action, calling on other states to follow its lead.