New York wants to ban sweepstakes

Introduction

New York authorities are stepping up their fight against unregulated gambling. New bill S5935, initiated by Joseph Addabbo, provides prohibition of sweepstakes imitating casino games. The draft law caused heated discussions, as its effect extends not only to the operators of such platforms, but also to financial institutions, payment services, geolocation providers and media platforms, which contribute to the operation of these games.

1. Severe fines for violations

If the bill is passed, any entity that supports or facilitates sweepstakes activities may be fined from $10,000 to $100,000 for each violation. In addition, for operators working in the field of gambling, it is possible to revoke a license. The document defines sweepstakes as online contests with a dual currency system, which allows players to exchange virtual currency for real money or their equivalents. Simultaneously, games that do not involve monetary winnings are not subject to the ban.

Proponents of the draft law claim that unregulated sweepstakes platforms circumvent consumer protection, responsible gambling and anti-money laundering laws, creating risks for users and undermining New York’s legal gambling market.

2. Who will be required to monitor the new law?

The implementation of the legislation will be monitored by several state agencies, in particular:

• New York State Gaming Commission
• State Police
• General Prosecutor’s Office

These bodies will be empowered to conduct investigations, issue cease-and-desist orders, and hold hearings regarding violators.

3. Criticism from the industry

Social and Promotional Gaming Association (SPGA), which represents the interests of sweepstakes operators, sharply criticized the legislators’ initiative.

“If passed as it stands, the bill could make it illegal to advertise sweepstakes used by New York City small businesses to attract customers. It would jeopardize millions of dollars in revenue for local businesses and could cause thousands of jobs to be lost”, said the SPGA.

In addition, the organization notes that even marketing campaigns from big companies like AT&T and Starbucks can be banned 

Separately, SPGA drew attention to the fact that the law could even extend to ticket raffles, similar to Marriott’s promotion last year that ran sweepstakes for Taylor Swift concerts.

4. The USA is strengthening the fight against sweepstakes

New York isn’t the only state trying to crack down on sweepstakes. Similar bills have recently been filed in Florida, Mississippi, Maryland, Connecticut, and New Jersey.

In Florida, bills aimed at banning Internet gambling and betting games have been introduced in the House of Representatives and the Senate. If passed, the violation would be a third-degree felony, although it would not affect the Seminole Tribe’s ability to continue offering sports betting.

The Mississippi Senate has already supported a bill to ban sweepstakes and include online lotteries and casinos in the list of prohibited games.

In Maryland, lawmakers are proposing to ban online sweepstakes. In addition, the new rules may make it more difficult for operators with gambling ties to obtain a license.

Connecticut’s Common Law Committee has proposed SB 1235, which would ban unlicensed online casinos, sports betting, and lottery ticket resale and delivery services.

Dealing with this type of gaming platforms becomes a nationwide trend, and the passage of new legislation could be a game-changer not just in New York, but across the country.

Conclusion

Bill S5935 can significantly change the rules of operation of sweepstakes in New York. Legislators justify its necessity as consumer protection and fight against illegal gambling, while critics warn of negative consequences for small businesses and the marketing industry.

As similar restrictions are being considered in other states, the situation surrounding sweepstakes in the US remains tense. If the law goes into effect, it could set a precedent for further bans or force companies to find new ways to adapt to changes in legislation.