Maryland’s Proposed Sweepstakes Ban Gains Traction

Maryland lawmakers seek to crack down on sweepstakes for good and introduce measures that put a stop to this controversial form of gaming. Under a pair of bills in the House and Senate, sweepstakes companies, which are currently operating in the state’s gray sector, will be outlawed.

SB 860 Passes the Budget and Taxation Committee

SB 860 and its companion bill, HB 1140, continue to gain traction in the Free State, spelling potential trouble for sweepstakes. The firmer measure just passed the Senate’s Budget and Taxation Committee with unanimous support, marking strong bipartisan support for a ban on social casinos.

In the meantime, HB 1140 has yet to pass the House Ways and Means Committee. A hearing took place on Tuesday but no announcement on its status was made.  

Sponsored by Senator Paul Corderman, SB 860 reflects America’s ongoing pushback against the rapidly growing sweepstakes sector. It comes amid broader efforts to put an end to social casinos, which have been operating with virtually no regulation.

If the measure is approved, Maryland will stop sweepstakes and allow its Lottery and Gaming Control Commission to block applications for gaming licenses by operators that profit from such operations. The state envisions penalties ranging from $10,000 to $100,000 and up to three years in prison for violators.

A few sweepstakes operators have opted to exit Maryland without further prompting. So far, these include Mega Bonanza, Jackpota, Spree, Hello Millions and McLuck.

Sweepstakes Face Pushback

Sweepstakes, for context, are a form of gaming that uses a dual currency system. The betting is done with a digital currency, which players can either buy or win for free via a variety of initiatives. The currency can then be redeemed for real money.

Supporters of sweepstakes argue that such products do not technically constitute gambling since players can play entirely for free. However, the option to purchase digital currency and participate in more games does constitute gambling, according to many.

Regulators, commercial stakeholders and tribal operators have all opposed the expansion of the sweepstakes industry, which competes with their products without obeying the same rules.

The Sector Seeks Regulation

In the meantime, the sweepstakes industry expressed dissatisfaction with Maryland’s approach. The Social and Promotional Games Association (SPGA), an industry body that champions the interests of sweepstakes operators, critiqued Maryland’s harsh decision to block sweepstakes. The SPGA called SB 860 a “hastily drafted legislation” and a “dangerous overreach.”

The sweepstakes industry has generally remained open to regulation. Many operators have said that they would not mind paying taxes and obeying regulations, as long as they are allowed to do business.

Unfortunately for them, the only state that has so far as much as considered sweepstakes regulation is New Jersey. A separate proposal in the same state, however, seeks to outlaw them.