On Tuesday, Chair of the NYS Senate Racing, Gaming, and Wagering Committee Senator Joseph P. Addabbo, Jr. saw his S5935 bill, which prohibits online sweepstakes games and revenues from illegal markets, pass completely unopposed.
Sweepstakes operators, which have been seen as gray areas in terms of legality, usually work by having players purchase gold coins (GC) and receive “sweeps coins” (SC) for free, usually at a 1:1 ratio of the amount of money spent on the gold coin package.
For example, a site may charge $500 for 1 billion GC, with players receiving 500 SC “for free.” Players can then play with the SC and redeem the SC for cash at a rate of 1 SC per $1. The GC, on the other hand, is essentially play money and is completely worthless.
“One of my primary objectives as Gaming chair is ensuring New Yorkers are protected from gambling operations that have the potential of becoming more problematic without proper legislative action, such as unregulated sweepstakes casino operators,” Addabbo told The Capitol Pressroom podcast less than two weeks ago.
“Many sweepstakes’ operators are located offshore making enforcement limited or impossible, and our most vulnerable populations, youth and elderly, are most often targeted, which is why I want to act to address this existing loophole.
“The use of money to play a game and win more money is simple gambling and should be safely regulated.”
Popular online poker sites Global Poker, ClubWPT Gold, Clubs Poker, and Stake currently use this sweepstakes model. These sites have been proven to attract many players learning how to play poker and generally have a separate online casino component.
According to a LinkedIn post by Howard Glaser, Global Head of Government Affairs and Legislative Counsel at Light & Wonder, sweepstakes operators could face fines between $10,000 and $100,000 per violation if lawmakers pass the bill.
The gray area these sweepstakes casinos have operated in would cease to exist, as the bill makes it abundantly clear that sweepstakes gaming is considered illegal, unregulated online gambling.
According to the bill, an online sweepstakes game is considered:
“Any game, contest, or promotion that is available on the internet and/or accessible on a mobile phone, computer terminal, or similar access device, that utilizes a dual-currency system of payment allowing the player to exchange the currency for any prize, award, cash or cash equivalents, or any chance to win any prize, award, cash or cash equivalents, and simulates casino-style gaming, including but not limited to, slot machines, video poker, table games including but not limited to blackjack, roulette, craps, and poker, lottery games including but not limited to draw games, instant win games, keno, and bingo, and sports wagering.”
Glaser also stated that “a companion bill A6745 has been introduced in the Assembly by Chair Woerner and is awaiting further action.” According to the New York Senate website, bill A6745 also “prohibits online sweepstakes games and revenue from illegal markets.”
New York is far from the only state looking to ban sweepstakes gaming, as Maryland, New Jersey, Connecticut, Florida, Nevada, and Mississippi have all filed bills.
On the flip side, senator Addabbo introduced a new iGaming bill in January, which would legalize online lottery sales, poker, and casino games.
Table games, slot games, peer-to-peer poker and live dealer games would all be permitted, with live dealer games required to be operated in a live gaming studio in the state of New York.
Operators would have to pay a one-time license fee of $2 million, while independent contractors would need to pay a $10 million fee. Operators would be limited to a single branded skin.
These operators would also be subjected to a 33.5% tax on gross gaming revenue, with players limited to a $2,500 annual limit on funding their accounts via credit cards.
Online sports betting has proven to be extremely popular in New York. In January alone, the state reported a mobile sports betting handle of nearly $2.5 billion.
It’s clear that players would brush up on their poker strategy should poker become legal in the state. If you’re in New York, it may be time to learn how to play Texas Hold’em.