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A bill aimed at banning the sweepstakes gaming model in New Jersey is making progress in the state’s legislature. This marks a significant turnaround, following a January proposal to regulate rather than ban the vertical.
Surprisingly, the proposal is being sponsored by Assemblyman Clinton Calabrese, who pushed for regulation earlier, and was introduced to the House in late March. It cleared the Assembly Tourism, Gaming and the Arts Committee with unanimous approval last week (May 8) and has now been transferred to the Assembly Tourism, Gaming and the Arts Committee for further discussions.
Assembly Bill A5447 is seeking a complete ban on what it calls “sweepstakes model of wagering.” It defines sweepstakes as any “promotional, advertising, or marketing event, contest, or game, whether played online or in-person, in which something of value, such as a prize or prize equivalent, is awarded, either directly or indirectly through means such as a dual currency system of payment that allows a participant to exchange the currency for a prize or prize equivalent.”
What Does AB A5447 Say?
Calabrese’s proposal stands out for its thorough definition of the sweepstakes model, addressing aspects that many similar bills across the country have overlooked. Notably, it introduces exceptions designed to support local businesses that depend on sweepstakes.
The legislation permits sweepstakes where entry is obtained through the purchase of food or non-alcoholic beverages, as long as the total cost does not exceed $20. Additionally, sweepstakes related to sports events or athlete performances are allowed, provided that the only method of entry is free for all participants. This crucial stipulation effectively prohibits operators from offering free gameplay while also selling ‘sweeps coins’ for cash.
“Any method of entry that is not free to the participant is ancillary to the purchase of food, non-alcoholic beverages, or other merchandise such as mugs, trinkets, or mementos, not exceeding $20 in value or such other amount to be determined by the Director of the Division of Consumer Affairs in the Department of Law and Public Safety; provided, however, that such other items of merchandise shall not include coins, tokens, or online credits that have no value other than permitting sweepstakes entry or that are able to be exchanged for money or merchandise from the sweepstakes operator or an affiliated company,” the proposal states.
During committee discussions, certain amendments were also introduced. Mainly, the definition of ‘game’ was redefined to include those that mimic casino-style games or sports betting, and so was that of ‘prize or prize equivalent.’
The bill also features serious penalties for operators who violate the ban. A $100,000 fine would be imposed on the first offense, while repeat offenders will face a $250,000 penalty. The New Jersey regulator would also be granted authority to fine operators $25,000 for every ignored cease-and-desist order.
The Division of Gaming Enforcement will handle the prohibitions of illegal gaming in the proposal, while the Division of Consumer Affairs will handle the regulation and enforcement of the provisions of sweepstakes.
Sweepstake Casinos Continue to Face Scrutiny Nationwide
Sweepstake casinos are under increasing legal scrutiny across the United States, with growing concerns about their marketing practices and accessibility. Stephen Finkel, Director of Legislative Affairs at the New Jersey Attorney General’s Office, argued that these operators don’t belong under the state laws, as voters are required to approve any gambling expansion through a public referendum.
He pointed out that these casinos often employ strategies that are not permitted for licensed gaming establishments, raising alarms about their appeal to younger audiences. He noted that children can easily access social casino sites, allowing them to participate in games without any oversight.
New Jersey’s legislative efforts reflect a broader national trend aimed at banning sweepstakes casinos. Recently, Connecticut introduced a similar bill, joining a wave of states, including New York, Maryland, Mississippi, Louisiana, Montana, and Michigan, that have either proposed or considered legislation targeting these operations. However, the Florida legislature turned down their own anti-sweepstakes measure last week due to lack of support.
The Assembly Consumer Affairs Committee is the next step for Assembly Bill A5447.
Source: SiGMA World
