Attention Sweepstakes Operators: Recent Developments May Impact You
The landscape for sweepstakes operators has shifted dramatically this week, bringing increased scrutiny from state regulators—an unwelcoming turn of events for the industry.
Crackdown in Louisiana and Mississippi
On Tuesday, the gaming regulators in both Louisiana and Mississippi—two states known for their thriving retail casino environments—took decisive action against various online platforms, issuing a wave of cease-and-desist orders. In Louisiana alone, a hefty 40 notices were sent out, while Mississippi followed suit with 10. The focus of these actions has been on problematic entities, including offshore sportsbooks, iGaming platforms, and sweepstakes operators.
The regulatory spotlight is largely directed at VGW Holdings, an elusive Australian-based company that has established itself as a significant player in the online sweepstakes market through brands like Chumba Casino, LuckyLand Slots, and Global Poker. Louisiana’s regulators specifically directed a cease-and-desist order to VGW itself, while Mississippi aimed its notice at Chumba Casino.
Amid these challenges, VGW has faced backlash from investors concerned about its declining financial health. In a recent statement, founder Laurence Escalante provocatively suggested that those who doubted his leadership should divest their stakes.
Legislative Developments in Louisiana
Just before these enforcement actions unfolded, an anti-sweepstakes bill had made its way through Louisiana’s legislature, only to be vetoed by Governor Jeff Landry. He expressed confidence in the ability of regulators to oversee the industry effectively, a decision that was initially celebrated by some industry stakeholders. The Social and Promotional Games Association commended the veto as a recognition of innovation within the gaming landscape, asserting that not all online games qualify as gambling and that legislation should not stifle legitimate businesses.
However, the Governor’s approval did little to change the perception among regulators. The Louisiana Gaming Control Board characterized their recent actions as a "show of enforcement strength," signaling a commitment to safeguarding the integrity of their gaming industry.
Regulatory Position in Mississippi
Mississippi also reinforced its position against online gaming, including sweepstakes. The Mississippi Gaming Commission clarified that any game where participants can wager for a reward, regardless of its classification as "free to play," is considered illegal under state law. Recently, the state has been working on legislation to prohibit sweepstakes entirely, although attempts to create a more comprehensive gaming bill—including mobile sports betting—have stalled in the legislature.
Executive Director Jay McDaniel asserted that the commission will actively pursue both domestic and offshore operators, stressing that these businesses mislead residents by falsely claiming legal status while contributing nothing in tax revenue.
New York Joins the Fray
In a parallel move, New York’s legislature has also pronounced a ban on sweepstakes, passing Senate Bill S5935A with overwhelming support. If signed into law by Governor Kathy Hochul, New York would join the ranks of states like Montana, Connecticut, and Nevada in implementing similar restrictions this year.
Earlier in the year, New York Attorney General Letitia James had already issued 26 cease-and-desist orders against sweepstakes sites, impacting all of VGW’s major brands. Consequently, VGW announced it would wind down its operations in the state, ceasing access for New York players by summer 2025.
A Broader Implication for the Industry
The combination of legislative moves and aggressive enforcement actions across multiple states highlights the growing vulnerability of sweepstakes operators. With increased regulation, companies in this niche sector may need to reconsider their strategies to mitigate risks associated with operating in these jurisdictions. The current environment suggests that regulatory bodies are not just monitoring but are actively taking action against perceived illegal activities, marking a critical moment for the future of online sweepstakes in the United States.