Sweepstakes casinos are in the crosshairs of New York lawmakers and regulators, as evidenced by a comment from Brian O’Dwyer this week.
During the most recent meeting of the New York State Gaming Commission, O’Dwyer — the commission’s chair — voiced his concern surrounding the proliferation of “social gaming,” as he put it.
“I have serious concern that there are operators conducting business inside our state that are running afoul of New York’s penal restrictions on unlawful gambling,” O’Dwyer said toward the end of the meeting. “I have discussed with our staff. It is my understanding that staff have made several referrals to law enforcement and is assisting in case development.”
‘Uptick’ in social gaming could lead to state action
O’Dwyer said he has “noticed an uptick in an activity that is generally referred to as ‘social gaming,'” adding that many residents in New York have likely seen ads for the activity on television.
On these sites, O’Dwyer said, individuals are encouraged to participate in “gambling or gambling-related games … using non-value virtual currency.”
“In my limited interactions with the activity, several operators seem to be skirting the law, or quite possibly violating the law,” O’Dwyer added.
Some sweepstakes casinos allow patrons to buy more gaming tokens once they run out. Other sites, the chairman said, offer the option to “use a secondary market” to exchange virtual chips or even “transfer their entire account for something of value.”
O’Dwyer continued with some assurance for the NYSGC and the public: If this type of activity continues and is found to be in violation of state law, “we will do everything possible to assure that that law is protected and respected.”
The NYSGC chair noted that he will provide more details regarding potential punishment, then concluded: “It is serious and it’s getting far more serious.”
SPGA issues statement in response
The Social and Promotional Games Association (SPGA), composed of many of the biggest names in the social gaming and sweepstakes casino industry, released a statement following the conclusion of the NYSGC meeting. The SPGA labels itself as “an organization dedicated to providing stakeholder education and advocating for the responsible operation of social games offering promotional sweepstakes prizes.”
“Social casinos with sweepstakes prizing are a safe and legal form of entertainment enjoyed by millions of Americans,” the statement read. “The practice of utilizing a prize-based sweepstakes as a promotional tool to incentivize consumers is a well-established one in most states.
“Like social games such as Zynga and Candy Crush, the vast majority of social sweepstakes players play for free, with no purchase necessary. Some players choose to pay to enhance their experience, but the amount of money they spend is very low, typically $1 or $2. Most players never spend money.”
Proposed Senate bill targets ‘unregulated’ sweeps casinos
Earlier this month, Sen. Joseph Addabbo Jr. once again introduced a bill to legalize online casinos in New York.
Within the text, the bill emphasizes that any unlicensed and unregulated entity offering gambling-related games within three years of the bill’s effective date would not be eligible to obtain an iGaming license in the Empire State.
Appearing on the City and State podcast, Addabbo pointed out a loophole — a dual-currency system used by sweeps casinos that allows players to purchase Gold Coins packages and simultaneously receive “bonus” or “free” Sweeps Coins, which players can redeem for real money. These platforms don’t technically require a deposit to play, allowing them to continue operations in most states under sweepstakes law.
Addabbo said he looks to ban those sweeps casinos in New York while also shining a light on legal and regulated iGaming “as a safe, effective alternative for online casino enthusiasts.”