US Legislators Propose iGaming Framework Without Sweepstakes

The National Council of Legislators from Gambling States (NCLGS), a US body that brings lawmakers together to discuss issues in regard to gambling, has drafted a new iGaming ruleset that promotes a ban on sweepstakes games. This proposal comes amid an increased pushback against the controversial sweepstakes sector.

The End of Sweepstakes Might Be Near

Sweepstakes have long been considered something of a “gray sector gambling.” While the model such operators employ is not legally defined as gambling, its similarities cannot be denied either.

As a result, regulators and industry stakeholders have been increasingly hostile toward sweepstakes, with some going as far as to label it “illegal gambling.” As the controversy continues, the NCLGS decided to include a ban on such products in its Model Internet Gaming Act draft.

The act, for context, is set to provide a framework to US jurisdictions that are mulling over the regulation of online gambling. A product of the joint work of lawmakers, experts and consultants, the model addresses key areas of the market.

The Model Internet Gaming Act seeks to create a regulatory framework that is both effective and poised to inspire public trust in the integrity of the regulatory process, according to NCLGS officials. Its provisions go beyond strict regulation and address many key areas.

The public can share their thoughts on the matter by December 31 after which the consultation period will close.

The NCLGS Seeks to Align iGaming Regulation in the US

The model act urges iGaming states to issue licenses valid for five years and advises them to employ strict compliance measures. Additionally, the NCLGS hopes to align iGaming regulation in the seven states where the vertical is already legal.

Among other things, the Model Internet Gaming Act recommends a tax rate of between 15% and 25%. It also proposes strict AML rules, robust KYC protocols and modern ads guidelines and safer gambling measures.

Most importantly, however, the NCLGS proposed tackling the controversial sweepstakes market. The proposed measures outlined in the document include, as mentioned, a complete ban, as well as penalties between $10,000 and $100,000 for violators. Repeat offenders, the NCLGS believes, should face up to two years in jail.

In any case, certain state regulators are already clamping down on sweepstakes. Tribal leaders have also condemned the market, which they believe cannibalizes their market share.