Are States Going Too Far on Sweepstakes Casino Bans?

Tennessee is now the ninth state to ban sweepstakes casinos. Michigan ignited the firestorm against sweepstakes casinos in 2023, and since then, opposition has intensified.

Lawmakers and state regulators have raised concerns about loopholes in gambling regulation, player protection, and lost state tax revenue, all to justify their actions. These actions group all sweepstakes casinos and poker rooms into one category, when the reality is that the industry is not uniform.

Today, we’ll look at why sweepstakes casinos have come under fire, whether regulators actually have a point, some possible alternatives to blanket bans, and how this argument impacts players.

Why Sweepstakes Casinos Are Under Scrutiny

Sweepstakes casinos have been under fire for a couple of years as regulators target them as illegal gambling operators. They claim that the sites are offering rebranded online casinos rather than genuine sweepstakes contests because players can play for real money prizes.

The dual currency system offered by sites has also come under fire. While sites claim a “free-to-play” model that classifies as sweepstakes play, regulators argue that these loopholes allow sites to offer backdoor illegal gambling.

Sweepstakes casinos are unlicensed, unregulated, and often lack the player protections you see at regulated sites. They view them in the same vein as offshore online casinos.

The Core Concern: Are Sweeps Casinos “Just Gambling”?

The primary argument from regulators and lawmakers is that sweepstakes casinos function as online gambling. They argue that sites are using dual-currency models and sweepstakes laws to circumvent online gambling regulations. 

Regulated online and brick-and-mortar operators argue that sweepstakes casinos are taking away revenue from their operations, while lawmakers argue that states are losing tax revenue from these “unregulated casinos.”

Sweepstakes casinos claim they are covered by sweepstakes laws in the states where they operate. They claim their “free to play” model constitutes online gaming rather than online gambling.

The Pro-Sweeps Counterargument

Sweepstakes casinos and their supporters argue that they operate legally in states that have well-defined sweepstakes or charitable gambling laws. Lawmakers tend to have an overly narrow focus when classifying sweeps casinos as illegal gambling.

Not All Platforms Are Built the Same

Lawmakers and regulatory groups lump all sweepstakes casinos into one category, even though they are not all built the same. For example, some casinos focus heavily on the free-play model while placing minimal emphasis on SC play. Other sites, such as Crown Coins, place heavy emphasis on free rewards and social media promotions. 

Some casinos offer games that are more like those found on social casinos rather than traditional online casinos. Of course, some look and play similarly to offshore online casinos and put a little too much focus on monetization.

Grouping them into one category penalizes reputable operators who are trying to provide a quality product and comply with state laws.

Free Play Is Still a Core Component

The main components of all sweepstakes casinos are the “free to play” concept. All sweepstakes casinos give players a chance to get free GC and SC to play at the casino. Players are never required to pay to play at sweeps casinos. You can gain coins from social media promotions, giveaways, daily logins, and by requesting them by mail. 

Can you cash out with tokens earned for free? Yes, it is possible to cash out from them. For example, I signed up for a new account at both Spindoo and SpinBlitz this week and was able to redeem my sign-up rewards. The free-to-play model is what differentiates sweep casinos from traditional casinos. Players can access casino-style gambling without paying.

Where Critics May Have a Point

If we’re being honest, it is clear to see why critics are making their claims. First, look at the games being offered by sites. They are from legitimate online casino gaming companies that primarily supply traditional online casinos. 

Next, the layout and presentation closely resemble those of traditional online casinos. If you remove gold coins and daily rewards, the sites look like your standard online casino.

Some sites also have weak responsible gaming tools. You can’t set limits on your play, and if they offer self-exclusion, they don’t clearly advertise it. 

Lastly, some sites blur the lines between sweepstakes and traditional gambling too much. They focus too much on getting you to buy coin packages and often slip up in their advertising, pointing out that you can get SC with your purchase. 

Oh, and let’s be honest, many sweeps casinos are not truly “free to play.” Many require that you make a purchase to “verify your account.” This is the same tactic that traditional casinos use for no-deposit bonuses. No, not every sweeps casino does this, but about 75% of the ones that I frequent do. 

The lack of focus on the “free to play” model telegraphs to regulators that sweeps sites are really just “loophole gambling” sites.

What a More Balanced Approach Might Look Like

Many states are overregulating sweepstakes casinos, with nine states now having outright banned them. Rather than banning sweepstakes casinos, states should adopt a more balanced regulatory approach. Here’s what I’d suggest:

Clearer Distinction Between Platform Types – States need to clearly define what constitutes sweepstakes or social gaming, as opposed to online gambling. Provide clear guidelines for sites to follow.

Eliminate the Dual Currency Model – Next, sweepstakes casinos need to eliminate the dual-currency model for gameplay. Only award SC as a prize, such as in a giveaway. Eliminate purchase bonuses and the ability to earn them through casino gaming. Yes, this change would remove the incentive for some to play there, but it would also resolve much of the debate over illegal gambling.

Regulate Sweepstakes Casinos as Online Gambling – Another option that would benefit all parties is to regulate sweepstakes casinos as online gambling. Offer the opportunity to become licensed and pay taxes like other regulated online gambling sites. Top sweepstakes casinos would find a way to make this work and make a stronger market for players.

Why This Debate Matters for Players

Every person playing at sweepstakes casinos needs to pay attention to what’s going on in other states. This debate will impact you, even if your state doesn’t ban them. For starters, as states continue to ban platforms, less profitable ones will shut down or leave the United States.

Next, you may start to see changes in rewards and promotions. As sites start losing revenue, they will begin shrinking or eliminating promotions. 

Lastly, your overall experience may change. You will likely see other operators pull their products, reducing overall gaming quality. Other changes may also occur, such as slower redemptions and fewer general site upgrades. Have you noticed that Pragmatic Play is no longer at your favorite site? That’s because they pulled their products from sweeps casinos over rising regulatory pressure.

It’s Time to Partner With Sweeps Casinos, Not Ban Them

Sweepstakes casinos believe they offer a legitimate and legal gambling alternative, while regulators believe they are illegal gambling. The tendency to blanket ban the industry is a bit short-sighted, as there are legitimate sweepstakes platforms that could work in partnership with other forms of online gambling.

It’s time for states and regulators to consider ways to regulate the industry or to set clear guidance for sweep platforms. Some change may be necessary, but partnering with regulators and lawmakers is a better alternative than allowing the industry to be regulated out of existence.