Assemblyman Clinton Calabrese is looking to put an end to sweepstakes casinos’ unlicensed operations in New Jersey, one way or another. Calabrese is the politician who introduced a bill earlier this year to regulate this form of social casino. However, this week, he submitted a second one that would instead ban such sites from the state entirely.
A summary listed on the state legislature website briefly outlines proposed Bill A5547, which reads:
Prohibits sweepstakes model of wagering; establishes new penalties for unlawful gambling operations and practices; directs Division of Consumer Affairs and Division of Gaming Enforcement to enforce penalties.
The move toward prohibition appears to be a bit of an about-face for the Democrat from Cliffside Park. Earlier this year, the assemblyman proposed legislation that would have legalized so-called sweepstakes casino operators in the Garden State. That bill, AB5196, would have created a licensing procedure for sweepstakes gaming apps, treating them as a gambling product equivalent to the state’s legal real-money casinos.
Sweeps casinos are unregulated in New Jersey
What the bills have in common is that they seek to create clarity about the status of sweeps in the state. Unlike real money casinos, which are regulated at the state level, sweepstakes casinos fall under federal law, and most states have no official stance on their legality.
Sweepstakes casinos offer slot games and other casino games to players online via an app or website. In a sweeps casino, customers do not wager real money, or win it directly. Instead, they earn free “sweeps coins” alongside their purchases of play money. Playing with those sweeps coins allows them to win more, which can ultimately be exchanged for cash prizes.
Some lawmakers see that business model as a loophole to skirt real-money gambling laws. Because the operators of sweepstakes casinos do not need a license, they can operate with impunity and don’t necessarily pay taxes on the revenue they earn.
“Sweepstakes casinos have operated in a regulatory gray area, which has led to significant challenges, including consumer protection concerns, underage gambling, and economic losses for the state,” Assemblyman Calabrese told Gaming Today in January when he suggested a path to licensure. “Recognizing these issues, I have introduced this legislation to address the lack of oversight for these platforms.”
What’s the appeal of sweeps?
For the most part, sweeps casinos seek to provide an alternative way to win cash while playing casino games, in states where real money online casinos aren’t available. That isn’t the case in New Jersey, but there are still a few reasons some players choose sweeps over real-money gambling.
Some players like sweeps casinos because they don’t have to link a bank account or credit/debit card to their account. If they wish, players can play for free with Gold Coins and not concern themselves with payment options. Even doing things that way offers occasional chances to earn sweeps coins and potentially win prizes.
Other states have also struggled with how to deal with online casino sweeps operators. In some cases, as in Michigan, authorities have sent cease-and-desist letters to sweepstakes casino operators. Other states have wrestled with legalizing the activity, or altering state gaming laws to create new mechanisms for regulating the games.
Next steps for sweepstakes casinos in New Jersey
Currently, there is no language for a proposed bill to ban sweepstakes casinos in New Jersey. Assemblyman Calabrese would need to submit such a bill for debate and possible vote in the state legislature. If it were passed by the NJ General Assembly, the State Senate could debate the bill, and vote on it. If it were to pass that hurdle, the bill would be sent to the desk of Gov. Phil Murphy, who could sign or veto it.
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