New York is the latest state taking aim at sweepstakes casinos operating in its jurisdiction, and according to reports, 26 sweepstakes companies operating in the Empire State were issued the formal cease-and-desist letters.
NY AG Says No to Online Sweepstakes
Attorney General Letitia James has formally submitted 26 cease-and-desist letters to operators of online sweepstakes casinos operating within New York’s borders. Although a specific time stamp of when these operators received their unwanted letters is unknown, one such letter made available to the press was dated March 7th, and it stated that the operator must vacate the state and cease operations within three weeks.
A champion of online sports betting and gambling in New York, Senator Joseph Addabbo, was firmly supportive of the letters issued by the Attorney General, and his backing did not go unnoticed by AG James. “Online sweepstakes casinos are illegal, dangerous, and can seriously ruin people’s finances,” James said. “I thank the New York State Gaming Commission and Senator Addabbo for partnering with my office on this issue to protect New Yorkers.”
Bills to ban online sweepstakes in New York were established in the Senate and the Assembly, serving as a precursor to this latest action by James. “These so-called sweepstakes casinos not only put individuals at risk of fraud and financial exploitation, but they also create dangerous pathways for gambling addiction, especially among minors,” Sen. Addabbo said late last week. “This is not about taking away anyone’s livelihood; it’s about protecting New Yorkers and working toward a safer, regulated online gaming environment for age-appropriate individuals.
Cannibalizing Business
The issue Addabbo and others who support regulated mobile sports betting and iGaming operators face is that the sweepstakes operate in a murky legal arena in which users can sign up for free and get tokens to play. However, they can also purchase tokens for cash and win cash prizes. This is where they can potentially cannibalize business generated by mobile sportsbooks that pay a 51% tax on revenues to the state, making New York the most lucrative mobile sports betting market in the nation.
The following platforms were specifically named as flagged in the press release:
- Chanced
- Chumba
- DingDingDing
- Fliff, Fortune Coins
- Fortune Wheelz
- Funrize
- FunzCity
- Global Poker
- Golden Hearts Games
- High 5 Casino
- Jackpota
- Luckyland
- McLuck
- Mega Bonanza
- NoLimitCoins
- Play Fame
- RealPrize
- Sidepot
Moreover, SpinBlitz, Sportzino, SweepSlots, Sweeptastic, TaoFortune, Yay Casino, and Zula Casino were issued a C&D letter.
These online casino sweepstakes platforms are neither licensed by the state nor do they pay taxes to it. The Chairman of the New York State Gaming Commission, Brian O’Dwyer, noted these operators are “unscrupulous, unsecure, and unlawful.”
Not surprisingly, the sweepstakes industry mouthpiece, the Social and Promotional Gaming Association, did not agree with the state’s stance. “Sweepstakes promotions are not gambling under federal law and are legally permitted in the overwhelming majority of U.S. states, including New York. Despite multiple attempts to engage directly with New York lawmakers and regulators, our outreach has gone ignored. Instead of working collaboratively to establish clear, modern rules for platforms that offer free-to-play games and do not require a purchase to win, the state has opted for overreach,” the organization countered.
