Banned in Tennessee
Three states – Tennessee, Oklahoma, and Iowa – have recently taken legislative action against sweepstakes casino sites as pressure for the sites to comply with state laws ramps up.
Let’s get right into it, starting with Tennessee. Last Friday, Gov. Bill Lee signed Senate Bill 2136 into law, banning online sweepstakes casinos completely. Games affected run the gamut from slots to poker to sports betting and everything in between.
Gambling that is already legal under state law is unaffected. For instance, legal sports betting is still fine – it is the version found on sweepstakes sites that is now prohibited.
Running, promoting, or supporting sweepstakes gambling products is barred; it does not appear that those who play the games will be in trouble.
Oklahoma ban despite Governor’s wishes
It is a similar situation in Oklahoma, though it was a bit more of a circuitous route to get there. Both chambers of the legislature passed SB 1589, which, like in Tennessee, makes sweepstakes online casinos illegal, but Gov. Kevin Stitt vetoed it, claiming the bill’s language was too vague.
Two weeks ago, however, both the Senate (34-10) and the House (68-19) overrode the governor’s veto, making the bill law. It was seen as an enormous victory for Native American tribes in the state, as they have butted heads for years with Gov. Stitt over any threats to their exclusive rights to gambling in Oklahoma.
The law does not go into effect until November 1, so sweepstakes casinos are still operating in the state.
Iowa cracking down, but not outright banning
In Iowa, Gov. Kim Reynolds signed SB 1589, which doesn’t make sweepstakes casinos illegal, but instead gives the Iowa Racing and Gaming Commission the authority to investigate and even shut down sweepstakes sites that it deems are operating in violation of the law.
Thus, we could see sites that have been operating in legal gray areas decide to just pull up stakes and exit the state. Some may decide to stay, but could potentially moved toward a more “social casino” model, using play money currency only.
Gambling sites that skirt laws
Sweepstakes casinos and online poker rooms like ClubWPT Gold and Global Poker have operated in what they believe is a gap in the law for years. They do not technically allow gambling with real money and thus have been able to skirt many states’ gambling laws, but they effectively get around the restriction by using a dual-currency system.
Games can be played for free with an in-game currency, often called Gold Coins (names vary by site, but we’ll stick with this for illustrative purposes). Gold Coins can be earned for free by signing up, via daily promos, and, of course, by gambling. No purchase necessary.
There are limits to how many Gold Coins someone can get for free without winning at the tables, so the sweepstakes sites allow people to buy more, similar to what one might see on a social casino app. And this is how the sites turn a free-to-play casino into a “real money” version. With their Gold Coin purchase, a player will receive Sweeps Coins (again, just using this naming convention for this article) as a bonus. These Sweeps Coins can be gambled with, and it is the winnings with this currency that can be cashed out or redeemed for real prizes.
The sites claim there is no gambling with real money and nobody can buy in-game currency that has any real-world value, but that is only because they say the Sweeps Coins are a bonus, a free gift that you get when you buy Gold Coins. Never mind that you can gamble with them and cash out. It is this loophole that states are now closing via legislation.
