Sen. Paul Corderman did not mince words on Wednesday: Online sweepstakes casinos are “ripping off” Maryland citizens.
About a month after first introducing Senate Bill 860, Corderman presented the proposal to the Senate Budget and Taxation Committee, noting that the “essence” of the bill is about “battling the proliferation of illegal online casinos.”
According to the senator, Maryland residents “are conned” into wagering an estimated $6 billion on black-market websites each year, “including on so-called sweepstakes casinos, which claim to be a sweepstakes contest but are in fact unregulated and untaxed gaming.”
His bill, Corderman said, is critical not only to protect state residents but also Maryland’s thriving gaming industry.
Corderman: Online sweepstakes casinos create ‘unfair advantage’
In early February, Corderman proposed SB860, which would effectively ban online sweeps casinos in Maryland. The bill would prohibit any game, contest, or promotion that is available online or accessible on a mobile device and simulates casino-style gaming — such as slots, blackjack, and video poker, among other examples — while utilizing a dual-currency system that players can exchange for any prize, award, cash, or cash equivalents.
Per the bill, violators would be subject to imprisonment of up to three years and/or a fine ranging from $10,000 to $100,000.
As Corderman put it on Wednesday, these operators create “unfair competition” to Maryland’s casino industry while evading consumer protections, responsible gaming, and anti-money laundering requirements set forth in the state.
What’s more, the senator added, players have reported not getting their money back. But “most disturbing,” he said, is that “there are no prohibitions against minors playing these games, which offer cartoonish animation and dangle million-dollar jackpots.”
Casino, iGaming advocates support the bill
Howard Glaser, the global head of government affairs and legislative counsel for Light & Wonder, spoke in support of the bill, noting that while not everyone in the Maryland gaming industry will agree on everything, they are all on the same team when it comes to online sweepstakes casinos.
“There’s a debate going on about whether the state should authorize online gaming,” Glaser said. “There are different points of view, as you well know, in the casino industry. There is unanimity, however, that the black market that is exploding and infiltrating the state needs to be stamped out.
“You’ll find no opposition to this other than from those offshore entities that are today conducting illegal gaming in the state and who have been found to be illegal games in every state that has looked at it. That’s the only other voice you’re going to hear here today or ever.”
Adrienne Lodge, COO of NFC Global and director of research at Spectrum Gaming Group, highlighted the “growing risk” of illegal online gaming platforms becoming a “key avenue” for transnational organize crime. Lodge noted that criminal networks use illegal and underregulated online casinos to “disguise illicit funds from cyberscams and fraud as gambling winnings, making dirty money appear legitimate. This enables them to buy stocks, real estate, luxury goods, while evading detection.”
VGW asks not for ban, but for collaboration
Present to offer a counterpoint, Josh White spoke on behalf of VGW Group, which runs sweeps casino brands such as Chumba Casino, LuckyLand Slots, and Global Poker.
“Social gaming is not gambling,” White emphasized. “Our games are always free to play with optional purchases of in-game tokens for enhanced gameplay; very common to games like Candy Crush and Clash of Clans. Tokens have no real-world value and cannot be redeemed for money.”
After mentioning that companies such as McDonald’s and Microsoft use sweepstakes promotions for marketing purposes, White drove home his point: Do not ban online sweepstakes casinos; work with them.
“Instead of driving game players to unregulated, unscrupulous platforms that lack essential safeguards and player protections, Maryland has an opportunity to establish a modern, effective framework that safeguards players and allows the state to benefit from a well-structured regulatory model,” White said. “Moreover, this bill is overly broad and risks chilling legitimate sweepstakes promotions used by retailers and other businesses.
“A better approach is regulation and not prohibition. Maryland can create a smart and beneficial framework that ensures customer protections, age verification, anti-money laundering, anti-fraud measures, and best-in-class responsible social game policies. VGW welcomes the opportunity to work with you and to achieve all these goals.”
VGW recently increased its minimum age requirement from 18 to 21, explaining to Sweepsy that the move was because their goal is to “exceed industry standards” when it comes to responsible gaming.
“We view ourselves as an RSG leader, and take this incredibly seriously, employing a team of industry experts, to ensure our games are enjoyed in a fun, healthy way,” a VGW spokesperson told Sweepsy this week.
SPGA: ‘Hastily drafted’ bill would be ‘costly … unnecessary misstep’
Unsurprisingly, the Social and Promotional Games Association (SPGA) voiced its opposition to SB860, which the group called “hastily drafted” and “a dangerous overreach, threatening legitimate business practices across Maryland while attempting to dictate what games adults can play on their phones.”
According to the group, Maryland could realize tens of millions of dollars in potential revenue through sensible registration and taxation of social sweepstakes operators.
Corderman’s statements during Wednesday’s hearing “fundamentally misrepresent the nature of SPGA member businesses,” the SPGA said, “which operate legitimately and transparently within the United States.”
All members of the group adhere to a Code of Conduct, according to the SPGA, that includes the implementation of features such as advanced age verification technology, geolocation verification systems, and robust anti-money laundering measures, among others.
As Maryland faces a steep budget deficit, eliminating online sweepstakes gaming “would be a costly and unnecessary misstep,” according to the SPGA.
“Properly operating social sweepstakes companies already contribute to Maryland’s economy through sales tax on digital purchases, a practice that a state-imposed registration fee could further supplement,” an SPGA statement read.
“Instead of eliminating this revenue stream, lawmakers can regulate and capitalize on an industry that provides safe, legal entertainment for thousands of Maryland adults who enjoy these games.”