• An American Gaming Association representative today described the legality of sweepstakes as “murky” during a webinar
• Chris Cylke, Senior Vice President of Government Relations for the American Gaming Association, said sweepstakes companies can take more risks
• Regulated members of the American Gaming Association will not offer sweepstakes gaming as they have more to lose, Cylke said

A representative for the American Gaming Association spoke out on the legality of sweepstakes casino gaming in the U.S., noting that the form of social gaming is too risky for regulated members of the association to offer to its customers.

Chris Cylke, Senior Vice President of Government Relations for the American Gaming Association, today joined Victor Rocha, conference chairman of the Indian Gaming Association, and Jason Giles, executive director of the Indian Gaming Association, on The New Normal webinar to discuss the proliferation of sweepstakes gaming in California and the presence of DFS 2.0.

The AGA is becoming increasingly concerned with companies offering what equates to be real-money gambling to customers in states by finding loopholes to skirt gambling laws and regulations, he said.

Sweepstakes Too Risky

The AGA turned its focus to sweepstakes gaming after the Michigan Gaming Control Board issued cease-and-desist notices in late 2023 to Cyprus-based Sweepstakes Limited (Stake.us) and San Francisco-based VGW Luckyland, whose parent company, VGW Holdings, is headquartered in Australia. The companies eventually withdrew their services from the state after receiving the notices.

Shortly after, association members asked the AGA to officially evaluate the legality of sweepstakes gaming in the country.

“They hadn’t been on our radar until that point but we started to dig in on them, how they operate. We found they’re making real money off of this, and started to get more dribs and drabs from our members that this is something we need to look at,” Cylke said.

The AGA circulated a memo to state regulators earlier this year urging gaming boards to evaluate sweepstakes gaming in their markets. The AGA asked state regulators to ensure company’s offering sweepstake casino or sports betting services were in line with their legal and regulatory frameworks.

The AGA found in its own evaluations that the legality of sweepstakes gaming is murky at best, Cylke said.

“If this was clear cut, we’d be involved in this space, is what our members have told us. It’s not clear cut. The only way some of these sweepstakes companies can get into this is they don’t have any skin in the game. They don’t have gaming licenses that would be put at risk,” he said.

This was the third in a series of discussions hosted by Rocha to discuss the proliferation of sweepstakes gaming and DFS 2.0 in California.

Regulatory Action May Be Necessary

Cylke noted the AGA has pushed for “more robust action from the Department of Justice and FBI in terms of investigating and prosecuting some of these bad actors.”

Sweepstakes are regulated under the Federal Trade Commission, Cylke said, which likely has little clue in terms of what’s goin on right now with sweepstakes casinos and sweepstakes sportsbooks.

These games have proliferated throughout the U.S. under the “auspices of innovation,” Cylke said, which have allowed these companies to circumvent the law and design a product to give customers the same feel as gambling, but not be qualified as gambling.

It’s going to take state regulators to begin taking enforcement action against these companies to deter their expansion. Once state regulators begin seeing their peers take action and scrutinize the offerings, more states will begin to regulate the games, he said.

“We’ve seen that with Bovada, we’ve seen that with certain elements of the DFS 2.0 space, and we’ll see something similar with sweepstakes casinos as well,” Cylke said.

SPGA Sharing Information

The Social and Promotional Games Association (SPGA), a member driven organization supporting the social sweeps industry and the responsibility of its members’ offerings, has been circulating a fact sheet claiming that social casinos with sweepstakes prizes adhere to the established model of social casinos, while also offering promotional sweepstakes prizes for players.

According to the SPGA, the majority of social sweeps customers do not play the real-money options or spend money on the games, with over two-thirds of customers only engaging in the free-to-play options. It reinforces the condition that no purchase is necessary to play or win prizes at the social casinos with sweepstakes promotions.

The association notes that all SPGA operator members limit real-money play to those who are 18 and older, use “regulation-grade technology” to verify player identities, and “work within qualified legal opinions regarding the state-by-state laws and regulations governing sweepstakes promotions.”