New York has dealt a huge blow to the sweepstakes industry by officially adopting a new measure banning the vertical. Under the Empire State’s new rules, sweepstakes casinos that use dual-currency systems will no longer be allowed to operate.
The End of Sweepstakes in the Empire State
The measure, Senate Bill 5935, was signed into law shortly after reaching Governor Kathy Hochul’s desk, marking the end of the local sweepstakes sector. The ban outlines a prohibition on both sweepstakes casinos and their B2B partners, such as vendors, payment providers, and advertisers.
The new law envisions fines from $10,000 to $100,000 for violators. At the same time, existing gaming licensees that violate the new rule risk having their licenses revoked. Other violators, on the other hand, might be denied a gaming license should they apply in the future.
The new rules will be enforced by the New York State Gaming Commission, the police, and the attorney general.
Sweepstakes Sector Under Fire
The ban in New York is another major blow to the sweepstakes sector, which has been struggling with regulatory headwinds for months now. While sweepstakes operators claim that their products do not constitute gambling due to their dual-currency system and the fact that players can enjoy their products and win for free, regulators have insisted that this format still counts as unregulated gambling.
As a result, several states have been issuing cease-and-desist orders to major sweepstakes companies, or eyeing a crackdown at a legislative level. While some states have rejected the calls for a ban for a variety of reasons, the broader pushback against sweepstakes casinos has intensified.
Maine and Florida are currently eyeing similar prohibitions, with some lawmakers strongly advocating for a ban. California, on the other hand, already introduced a ban of its own.
Sweepstakes proponents, however, have firmly rejected such drastic measures, saying that they are going to cause more harm than good. Industry stakeholders asserted that sweepstakes are generating significant economic activity and have proposed introducing a regulated sweepstakes framework, not unlike the one for gambling.
However, lawmakers have mostly rejected these calls.