As the popularity of sweepstakes-based wagering models continues to surge, the American Gaming Association (AGA) has sounded the alarm on the potential risks these platforms pose to consumers and the legal gaming industry. In a recently released policy statement, the AGA emphasized the need for increased regulatory oversight to prevent sweepstakes casinos from circumventing state gambling laws and exploiting legal ambiguities to operate unchecked.

Sweepstakes Casinos: A Growing Threat

The rise of so-called “sweepstakes casinos” has introduced a new and unregulated form of online gambling that mimics traditional casino games such as slots, roulette, blackjack, and poker. These platforms allow players to engage in gameplay either for free or by purchasing virtual currency, commonly known as Gold Coins. Alongside Gold Coins, players may also receive Sweep Coins, a secondary form of virtual currency that can be exchanged for cash or prizes, making these games increasingly indistinguishable from conventional online casinos.

However, the dual-currency model used by these operators—where Sweep Coins are presented as “free” but often require real money or significant time investment to redeem—has raised concerns among regulators and industry stakeholders. The AGA’s policy statement highlights the dangers posed by the lack of regulatory oversight, which “presents many risks for consumers as well as the integrity and economic benefits of the legal gaming market through investment and tax contributions.” The organization notes that many sweepstakes operators implement weak, if any, responsible gaming protocols and offer minimal self-exclusion processes, leaving players vulnerable to exploitation.

Michigan Takes Action Against Sweepstakes Operators

In response to the growing presence of sweepstakes casinos, some states have begun taking legal action to curb their operations. Michigan, in particular, has emerged as a battleground in the fight against unregulated sweepstakes gambling. In November and December of 2023, the Michigan Gaming Control Board (GCB) issued cease-and-desist orders to Cyprus-based Sweepstakes Limited (Stake.us) and San Francisco-based VGW Luckyland, both of which offer sweepstakes-based gaming services. These companies were found to be in violation of Michigan’s gaming laws, including the Lawful Internet Gaming Act, which mandates that internet gaming can only be offered by licensed operators.

The GCB’s crackdown on VGW Luckyland also cited violations of the Michigan Gaming Control and Revenue Act and the Michigan Penal Code. The GCB determined that VGW’s activities constituted illegal gambling, as they involved “conducting illegal gambling by offering an internet game in which a player wagers something of monetary value for the opportunity to win something of monetary value.” As a result of these violations, VGW and other sweepstakes operators have been forced to cease operations in Michigan.

A Call for Broader Regulatory Scrutiny

The AGA has called for more comprehensive regulatory scrutiny of sweepstakes casinos and sportsbooks operating under similar models across the United States. The trade group argues that these platforms exploit legal loopholes and often operate in a legal gray area, undermining the integrity of the regulated gaming industry and depriving states of crucial tax revenue. The AGA’s policy statement urges regulators and state attorneys general to investigate these companies thoroughly to ensure compliance with state laws and regulations.

In addition to enforcement actions, the AGA recommends that legislatures consider enacting new laws to close existing loopholes that allow unlicensed operators to offer online real-money gambling under the guise of sweepstakes. “Where state laws and regulations are not clear, legislatures should consider enacting legislation to prevent unlicensed operators from exploiting loopholes in sweepstakes regulations to offer online real money gambling,” the AGA stated in its policy.

The Need for Immediate Action

Industry experts warn that the rapid growth of sweepstakes casinos presents an urgent threat to consumers and the legal gaming industry. According to a recent report by Eilers & Krejcik, the market for sweepstakes gaming is expected to reach approximately $8.5 billion in 2024, with projections suggesting it could explode to over $11 billion by 2025. This growth has been fueled, in part, by a surge of private equity investment, with investors betting that states will be too slow to crack down on these operators.

As highlighted in a recent LinkedIn post, the opaque nature of sweepstakes operations “presents a prime opportunity for illegal activity and enriching bad actors.” The post further warns that sweepstakes casinos are “flooding into states in which online gaming is otherwise illegal, and it’s hitting unsuspecting consumers like a tidal wave.”

Given the potential for harm, the AGA and other industry stakeholders are urging regulators to take swift action to protect consumers and preserve the integrity of the legal gaming market. The sooner regulatory bodies and state attorneys general address these concerns, the better it will be for consumers, the industry, and the prevention of illegal activities such as money laundering.

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A recent study into the gambling monopoly system conducted by the Finnish government has concluded that maintaining the status quo is not a recommended option. 

Unlicensed Gaming Amounts to $600m Loss for Finland’s Exclusive Rights System

The report stated that around 50% of all gaming activity takes place on unlicensed sites, which amounts to a considerable loss of money outside the exclusive rights system, estimated to be around EUR500-550 million ($549-603 million) per year.

Furthermore, engaging in gambling outside the system can lead to considerable drawbacks, which are difficult to prevent under the current system’s framework.

Veikkaus’ top management welcomed the report and its findings and highlighted the scale of the offshore industry, expressing readiness to implement a licensed system to increase Finland’s channeling rates.

According to Olli Sarekoski, the CEO of Veikkaus, it is significant that the gaming revenue outside the exclusive rights system has been confirmed to be within the range of EUR500-550 million ($549-603 million), which is consistent with the information presented by H2 Gambling Capital.

Sarekoski further added that in Veikkaus’ opinion, if there is a shift towards a licensing system, it would be preferable for this change to occur quickly rather than gradually.

Already back in September 2022, Veikkaus’ deputy CEO Velipekka Nummikoski suggested that implementing a licensing system similar to Sweden’s, which reached 90% channelization, may be a good solution as more and more Finnish players are turning to unregulated markets. 

Several independent policy agencies recommended dropping the monopoly system, but the Social Democrat Party rejected the proposal. Veikkaus also asked for a delay in identification checks implementation, citing difficulties in supplying the necessary hardware.

Finland Considers Two Paths for Gaming Market Reform

The government report presented two possible paths for reforming the country’s gaming market. The first option – based on the Norwegian model – would be to reduce the availability of unlicensed offerings to Finnish consumers. This would be achieved by giving new powers to the regulator and law enforcement to make it more difficult to successfully deliver such gaming to users.

The second option would be to introduce a licensing model, which is the model embraced by the majority of Finland’s neighboring countries. 

According to the preliminary study, a licensing system could potentially result in a higher channeling rate for online gambling than the current situation.

The study further noted that a possible licensing regime would in principle cover online casino games and online betting. Veikkaus would retain exclusive rights for slot machines, physical casinos, on-premises betting, and lotteries, as well as lotteries and sweepstakes, regardless of the channel.

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Two long-term gaming executives with significant experience within the vertical were recommended for licensing by the Nevada gambling regulator, the Nevada Gaming Control Board (NGCB), a report released by Las Vegas Review-Journal reveals. One of the executives was Julie Cameron-Doe, Wynn Resorts’ chief financial officer, while the other one was Joe Asher, IGT’s president of sports betting and chair of the Board at The Wilson Center.

The recommendation for new licensing came during two separate hearings in Carson City. The NGCB recommended Cameron-Doe for an officer, while Asher was recommended for licensing as a key executive. The two discussions resulted in unanimous approval. Besides the recommendation, the duo is expected to receive final approval for their licensing during an NGCB meeting planned for April 20, 2023.

Cameron-Doe’s recommendation for licensing comes as no surprise, considering her extensive experience within the gaming vertical. Currently serving as a chief financial officer at Wynn Resorts, Cameron-Doe joined the company back in 2021. She took over the role of Craig Billings, who was appointed as CEO of Wynn at a time when Matt Maddox left the company.

Before Wynn Resorts, Cameron-Doe was a part of the leading provider of gaming solutions, Aristocrat, for nearly a decade. Besides the role of a chief financial officer, during her tenure with the company, she was also a group general manager of finance.

Throughout her career, Cameron-Doe has secured many licenses. Overall, she has pending licensing applications within 13 different jurisdictions. NGCB’s board member, George Assad, acknowledged that Cameron-Doe’s approval for licensing was “a slam dunk,” considering her extensive experience and knowledge within the sector.

On the other hand, Asher is also a seasoned iGaming industry veteran with significant knowledge and a deep understanding of the gaming vertical. His extensive experience includes close to a decade as CEO of William Hill US, the US-facing arm of the gambling giant William Hill.

Moreover, Asher was also the president and CEO of Brandywine Bookmaking, a company he helped form in 2006. After a few years of successful business, the company was sold to William Hill in 2021 and this is when Asher became the CEO of William Hill US. Brandywine remained an asset for William Hill until it was sold to Caesars a few years ago.

More recently, Asher joined IGT in October 2021 and is currently holding the role of president of sports betting. Last month, he was appointed as chairperson of the Board for The Wilson Center, a non-partisan policy forum for research and open dialogue.

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