In its recent report to Gov. Phil Murphy, the New Jersey Responsible Gaming Task Force has endorsed a proposed ban on sweepstakes casinos currently under consideration in the legislature. The 109-page “Report to the Governor on Responsible Gaming,” dated March 31, outlines the task force’s findings and recommendations for reducing problem gambling and promoting responsible gaming practices in the state.
Formed last year by Gov. Murphy, the task force was charged with evaluating regulated and unregulated gaming in New Jersey, current education initiatives, and funding sources related to responsible gambling. Its report proposes several reforms to standardize and streamline responsible gaming efforts statewide.
Among the recommendations is that the state support legislative efforts to prohibit the spread of unregulated gambling, including sweepstakes casinos. In March, Assemblyman Clinton Calabrese introduced a bill banning sweepstakes casinos in New Jersey. He previously introduced another bill that would instead regulate them under the same laws as real-money gambling sites, but later withdrew that proposal.
Task force says sweeps casinos lack consumer safeguards
Sweepstakes casinos operate under federal sweepstakes laws, making them legal in most states, except in those that have explicitly banned them. They offer casino-style games but don’t use cash for wagering. Instead, these platforms allow users to play for fun or participate in sweepstakes promotions, where they have the opportunity to redeem winnings for cash prizes.
According to the task force, sweepstakes and social casinos offer the same gaming experience as real-money online casinos. However the platforms don’t have to obtain a license. While operators argue they aren’t gambling platforms, the task force disagrees:
Certain sweepstakes operators have blurred and likely crossed the line into actual gambling by allowing prizes to be awarded in return for “tokens” that are won only by entering the “sweepstakes” through a payment. For participants, they pay money and play a simulated card game, slot game, or other casino-type game and are awarded tokens that can be redeemed for prizes. The experience is the same as playing a regulated gambling game.
The task force warns that sweepstakes casinos do not offer responsible gaming features. That means they pose a threat to New Jersey residents, especially those under the legal age to gamble. Also, unlike regulated real money online casinos, sweepstakes casinos do not implement key consumer protections such as anti-money laundering protocols, fraud and collusion prevention, responsible gaming measures, self-exclusion programs, or Know Your Customer (KYC) verification.
Furthermore, the report states that the state’s Department of Consumer Affairs has received numerous complaints about sweepstakes casinos. Issues include not paying out prizes, blocking consumers’ access to their accounts, or not being transparent about the contests’ terms and conditions.
Recommendations could give momentum to sweeps ban
The task force’s recommendations will be welcome news for proponents of banning sweepstakes casinos in New Jersey. Calabrese’s bill, A5447, has not made any progress since its introduction and sits in the Assembly Consumer Affairs Committee. However, the task force’s findings could catalyze renewed legislative momentum, especially if Governor Murphy and Attorney General Matthew J. Platkin, who chairs the task force, publicly back the proposal.
If the bill gains traction, it would mean bad news for sweepstakes operators and could spark an exodus of sites similar to that in neighboring New York. Numerous states have attempted to pass bills banning sweeps this year, yet the industry has earned a reprieve as most of those efforts failed. Meanwhile, regulators have had more success forcing sweepstakes sites out by issuing cease-and-desist letters, although this has to be done on an operator-by-operator basis.
