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If you’re a fan of Chumba Casino, Global Poker or Luckyland Casino and you live in Delaware, your days to enjoy those products could be numbered. The gambling regulatory body in your state is stepping up enforcement of Delaware statutes.
Primrose Riordan of the Australian Financial Review first reported that the Delaware Lottery has ordered Virtual Gaming Worlds (VGW), the Australian company that owns those gaming sites, to cease operations in the state. If VGW coalesces as it has in other states, that decision could accelerate momentum against the sweepstakes casino format in the United States.
Delaware takes action against VGW
Online casino play is producing more revenue for the Delaware Lottery than ever and the organization in charge of regulated gambling in the state might be taking action to protect its interest there. Riordan wrote that the Delaware Lottery has sent communications to VGW ordering the company to stop all operations in the state.
The Delaware Division of Gaming Enforcement (DDGE) confirmed that it issued a cease and desist order to VGW concerning its “slot operations/games in Delaware.” The order stated that “permitting those people who reside in Delaware to participate in these games is in violation of Delaware law.”
Since Rush Street Interactive (RSI) took over as the online casino vendor for the Delaware Lottery in August 2023, the returns have been exponentially higher than they were with the former vendor, 888 Gaming. Delaware online casino win in June surpassed $5 million, marking a new single-month record for that gaming segment in the state.
Although RSI is the only licensed online casino operator in the state, products like Chumba operate in the “technically legal but perhaps only because enforcement agents haven’t pressed the issue” area. In Delaware, the potential legal fallout might not be worth the squeeze for VGW.
How VGW products avoid legal scrutiny
VGW runs its US-facing products in most states under a sweepstakes model. The legal sales pitch is that its games are no different from a sweepstakes you might enter to win a new car as part of a fundraiser.
The operating model is somewhat materially different from what is called a “real money” online casino in that VGW sites offer two types of currency to players. One can be purchased by players but not exchanged for prizes. The other can be exchanged for prizes but not purchased.
While actual cash is among the prizes on Chumba, Global Poker and Luckyland, it’s a result of your winning the games instead of risking your money. Additionally, to satisfy the sweepstakes requirement, players can obtain free tokens to play games with.
At the same time, many of the online slots on VGW’s sites are similar, if not identical to, what you will find on licensed operators’ apps and websites. VGW offers such games without an online casino license in states like Delaware.
That creates concern that action is being taken away from the licensed operators and thus revenue from the state. While Delaware’s gambling regulatory body has taken action, it isn’t the first to do so.
Michigan’s attorney general might have set precedent
Earlier this year, Michigan Atty. Gen. Dana Nessel ordered a different sweepstakes casino operator to cease accepting paid entries in the state. As a result, VGW preemptively took that action in May, adding Michigan to the list of US states it has carved out of its operations.
Like Delaware, Michigan has a regulated system for online casino play. The state’s attorney general stepping in represented an escalation compared to what may be going on in Delaware right now, though.
As the regulatory body for gambling in the state, the DDGE has the authority to sanction violations of gaming law against licensed parties. However, its jurisdiction ends there.
It could refer the situation to the state’s attorney general, currently Kathy Jennings. She could take similar action to Nessel, and that would have the threat of possible criminal charges behind it.
Whether such prosecution would be successful is a different matter. Regardless, VGW might not want to take the risk.
Why VGW might comply amid a murky legal situation
If a case involving criminal charges against a sweepstakes casino operator were to ever actually go to trial in a US state, the proceedings would be loaded with consequences for many parties. The state would need to tread carefully or risk making all forms of sweepstakes within its borders illegal.
State legislatures could address the issue and enact clarifying statutes. Even then, the language of the new code would be critical.
Defending its operations would represent a significant financial cost for VGW. If having access to Michigan’s population wasn’t enough to warrant such an expense for VGW, Delaware’s much smaller population would make that decision even easier.
Either way, it seems momentum is building against sweepstakes casinos in the US. A trade association for the gambling industry is speaking out as well.
AGA joins voices calling for enhanced scrutiny
The American Gaming Association (AGA) recently published a call for regulators across the country to review the operations of sweepstakes-based sites according to their gambling laws. The AGA has also called upon state legislatures to review their statutes and address loopholes that such companies could be exploiting.
An escalation in these regards has little upside for companies like VGW and the company voluntarily ceasing operations in Delaware could only strengthen perceptions that sweepstakes casinos might be operating outside the law. All these signs could point to a shrinking map for sweepstakes sites that offer casino games in the US.
