Legal Backlash: Why Sweepstakes Casinos Are Under Pressure
Sweepstakes casinos might be in trouble.
If you’re an active online casino player, you’ll know about Chumba Casino, Stake.us, and WOW Vegas, which are some of the big-name sweepstakes casinos on the market. There’s even a chance you’ve already created an account with one of them.
Since 2020, these sites have been booming. By booming, we’re talking millions of sign-ups. New generation players have been absolutely hooked.
However, things could be about to change in the future. That’s how it’s starting to look, anyway, based on the recent legal fire coming in the direction of sweepstakes casinos.
The past 12 to 24 months have been rough for some sweepstakes operators. And that’s really putting it lightly. Sure, player numbers are still rising, but so are the number of problems that these sites are having to face:
- Lawsuits
- Player complaints
- Pressure from regulators and trade groups
For the sweepstakes casinos out there, it’s not looking great. After years of riding high, the sweepstakes bubble could be about to “pop”, leading to some major industry changes and yet another reshaping of how the online casino world functions.
Let’s get you up-to-date on exactly what’s been going on.
The Growing Legal Pressure Surrounding Sweepstakes Casinos
Sweepstakes casinos are under legal pressure because of the model they use.
If you’re a player with a sweepstakes casino account, you don’t bet real money. Instead, players are given virtual Gold Coins and Sweeps Coins. These coins can then be used to play all of the available games, including slots, roulette, and blackjack.
At the same time, players can also enter free-to-play tournaments, climb leaderboards, and potentially win some prizes at the end of it all. The way prizes are redeemed is through collecting enough Sweeps Coins. If you stack enough of them, great news: you can choose between cash transfers, gift cards, and other similar prizes in the prize redemption menus.
All of this sounds perfectly normal, right? Sort of.
On the surface, sweepstakes casinos are completely harmless when you’re playing the games for free. However, if you ever run out of Sweeps Coins, you might feel compelled to purchase more of them using your own money. This could then lead to a cycle where you’re losing money by constantly purchasing new coins, which some consider to be inadvertent gambling.
It’s the main reason why sweepstakes casinos are potentially in legal trouble. There’s now a growing sense around these casinos that they are actually illusive gambling sites, even though they only use virtual coins. And unsurprisingly, the lawsuits are flying in.
A Sweepstakes Casino Ban Would Be “Unfair” Says Mike from SweepsKings
Sweepstakes casino expert Mike from sweepskings.com has recently shared his thoughts on the controversy surrounding sweepstakes casinos and how states banning them would be a bad move to make:
“If state lawmakers do decide to implement bans against sweepstakes casinos, it would be extremely unfair on both the casinos and the players themselves. After all, these sites are a safe space for those looking to play casino games without the pressure of real money gambling. And when you compare them to traditional online casinos, there’s no contest as to which is the safer option.
The idea that sweepstakes casinos are misleading or pressuring players to buy Sweeps Coins isn’t really true, either. There’s zero requirement on behalf of the players to buy these coins and you don’t even have to link your bank account when you sign-up. This is why state lawmakers should consider looking at sweepstakes casinos in a more positive light, as they’re not the exploitative gambling sites they’re being made out to be.”
High 5 Casino Slapped With $25 Million Lawsuit Loss
One of the major sweepstakes casinos — High 5 — took a legal beating earlier this year when they were ordered by a Washington state jury to payout $25 million in damages to players. Why? The jury believes that because players are given the option to purchase virtual coins with real money to keep playing, it constitutes illegal gambling.
Following the lawsuit, High 5 has yet to make an appeal and it seems as though the site will indeed be paying out these damages. Specifically, the money is going to players who exchanged real money for the virtual coins and those who believe they were ‘misled’ by the platform.
It’s the biggest legal payout to-date inflicted on a sweepstakes casino and has sent shockwaves through the industry. Seemingly, most sweepstakes casinos are now a little bit scared that they could be next, especially as they all follow the same model of allowing players to purchase virtual coins with their own money.
Sweepstakes RICO Lawsuit Dismissed
It isn’t all bad news for High 5 casino, though, as another lawsuit they were recently stuck in the middle of — this time, a RICO lawsuit — has just been dropped. CrownsCoins Casino, McLuck, and WOW Vegas were also named in the lawsuit but the plaintiff ultimately decided to let the case go. Originally, Julian Bargo, a New Jersey resident, had filed the lawsuit after losing over $1,000 across these different sweepstakes casino sites. His belief was that they are secret gambling sites that present themselves as something else, but the lawsuit has now been dismissed for an undisclosed reason.
The AGA Calls for Legal Action to Be Taken Against Sweepstakes Casinos
Last year, the American Gaming Association (AGA) threw its hat into the ring by issuing a harsh statement against sweepstakes casinos.
In a nutshell, the AGA is a group that represents casinos in the US and looks to protect players by making sure gambling laws are being followed. What’s happened is that the AGA has caught onto the sweepstakes casino hype, seen that the operators are effectively looking to “exploit legal loopholes”, and therefore called for action against them.
What the AGA wants is for state lawmakers to take action against sweepstakes casinos and treat them the same way they do regular online casinos. Remember, sweeps casinos are currently legal in 48 out of 50 US states, whereas online casinos are only allowed in 6 of them. This is because sweepstakes casinos use virtual coins, which is where the AGA’s accusation of using a legal loophole comes from.
More States Looking to Outlaw Sweepstakes Casinos
In response to the growing popularity of sweepstakes casinos, as well as ongoing lawsuits and the AGA’s recent call-for-action, more states have started looking to outlaw sweepstakes casinos. These states include Connecticut, Maryland, Mississippi, New Jersey, and New York, with all of them recently filing bills wanting to ban sweepstakes casinos. If these bills are approved, it would lead to huge losses for today’s active sweeps casinos while potentially encouraging other states to follow suit.
Summary
Between now and 2030, it’s going to be extremely interesting to see what happens to sweepstakes casinos. Based on recent trends — such as player lawsuits and individual states issuing bills against these sites — all signs point to sweepstakes casinos being banned in at least a handful of states. At the very least, they will have to follow stricter gambling laws. This will lead to today’s sweepstakes casinos losing out on lots of players — and it could ultimately be the end of the sweepstakes “boom” that players have been loving since 2020.
