New Jersey Assemblyman Clinton Calabrese has introduced a bill that will designate sweepstakes casinos as internet gaming. If the bill becomes law, it will regulate sweepstakes casinos using the same framework that applies to real-money gaming operators.
That means, to operate a sweepstakes casino, the operator would need to partner with a licensed Atlantic City casino and apply for an internet gaming permit.
PlayUSA has obtained a copy of the proposed legislation. The bill’s summary reads, in part:
Under the bill, online sweepstakes casino operators that become licensed, partner with a casino licensee, and receive an internet gaming permit will be subject to the same legal requirements and standards of all other internet gaming operators.
“This includes the conduct of background checks for employees, the prohibition on accepting wagers from persons under the age of 21 and the required use of age verification tools, the payment of licensing and permitting fees, and the payment of taxes on all gross internet gaming revenues.”
The “sweeps” model takes free-to-play social casinos and adds a sweepstakes with a chance to win cash prizes. That has proven controversial in some states and with the commercial gaming industry, which sees unlicensed competition as a threat.
Some states are also grappling with the legality of physical machines operating on similar principles. For instance, North Carolina Court of Appeals recently ruled against video sweeps in that state.
What does the bill entail?
The Social and Promotional Games Association (SPGA) has given its official stamp of endorsement to a bill saying it aligns with the goal of their trade union.
A SPGA official statement read:
The SPGA welcomes Assemblyman Calabrese’s bill. The SPGA and its members are advocates for clear regulations that enable transparent, innovative, and responsible social and promotional gaming experiences.
“The bill aligns with our core objective of reinforcing the well-established legality and legitimacy of social sweepstakes games, which millions of American adults enjoy.”
The bill would give the Division of Gaming Enforcement new powers to crack down on unauthorized sweepstakes casinos. They’d be able to work with law enforcement and telecom providers to block access to these sites in New Jersey. And if an unauthorized site gets caught, they’d face penalties of up to $1,000 per player per day, plus $10,000 per violation for advertising.
Compared to other states, New Jersey’s approach is more comprehensive. For example, some states only require sweepstakes casinos to register with the state but don’t provide the same level of oversight. Others, like Nevada, have strict laws against unauthorized online gaming but don’t provide the same level of cooperation between law enforcement and telecom providers. However, Pennsylvania, which has similar laws in place, only provides for fines of up to $5,000 per day for unauthorized sites, which is significantly lower than New Jersey’s proposed penalties.
Regulation of sweepstakes could pave the way for new revenue streams
Sweepstakes currently operate without regulation across the North American market. However, their increasing popularity has caused intense debate within the industry over potential legal and regulatory challenges that could arise on the path to formal oversight.
If passed, Calabrese’s proposed legislation would be the first of its kind in the nation. How sweepstakes operators and land-based casinos would react to the a regulated market for sweeps is uncertain. However, a number of sweeps sites were to begin regulated operations, it would mean a new source of revenue for the state.
Real-money online casinos pay licensing fees and state privilege taxes. However, social casinos—including sweeps—are not typically regulated at the state level and therefore pay only the same taxes as any other business.
New Jersey’s gaming revenue from all channels in 2024 was a record high of $6.3 billion, a 9% jump from the year 2023. Adding sweeps as a new stream could help propel that higher still.