Sweepstakes Continue to Expand amid Intensifying Oversight

For several years, sweepstakes casinos have continued to capture the attention of players across the United States. While online gambling such as slots or other casino games is available only in seven US states, sweepstakes are widely spread across the country with the prime reason being the lack of regulation.

Operating in a grey area, at least for the moment, sweepstakes casino games grant players a form of entertainment that resembles iGaming. Taking the best out of social casinos and online gambling, sweepstakes operators grow their business year after year. Now, an expert suggests that while there’s little evidence of cannibalization, it is likely that social casinos may suffer from the expanding reach of sweepstakes.

Social Casinos May Suffer from the Expansion of Sweepstakes

Aaron Lee, an expert analyst with Macquarie, who was recently interviewed by Casino.org, commented on the hot topic, pointing to the solid growth of sweepstakes casino games. The expert acknowledged the unquestionable growth of sweepstakes over the last five years, considering the sector’s worth at approximately $4 billion as of 2024.

Lee pointed to the similarities between online gambling and sweepstakes, adding that currently there’s “little evidence of cannibalization.” Maintaining a positive outlook, the expert said that the growth of sweepstakes casinos may push iGaming legislation by “attracting attention to the untapped tax revenues.” Still, the ongoing expansion may ultimately impact social casinos, rather than iGaming, according to Lee.

Sweepstakes May Face Restrictions in the US

Macquarie’s analyst spoke about the difference between online gambling and sweepstakes, confirming that the latter effectively omits the element of consideration, which is one of the primary components when it comes to gambling. While that may be the case, sweepstakes casinos often offer two forms of virtual currency, one that has no real-money value and another that is called sweeps coins which have real-money value.

Speaking about the sweeps coins which can be redeemed for real money or prizes, Lee said: “This is the sweepstakes promotional aspect, whereby sweepstakes operators would argue that the sweepstakes promotes the purchase of the virtual currency.”

The growth of sweepstakes comes in the context of planned legislation that may lead to the establishment of a taxation model for such games or even their prohibition. Recently, the National Council of Legislators from Gambling States (NCLGS) proposed an iGaming framework without sweepstakes games.

Other opponents of the sweepstakes sector have also raised concerns regarding the policies such operators enforce, if any when it comes to anti-money laundering, know-your-customer and underage gambling. An ongoing concern for opponents of sweepstakes games is responsible gaming tools, which are available via licensed betting and iGaming operators across the country. However, since sweepstakes operate in a grey area, they are not obligated to offer such a form of protection for their customers.