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New York is looking to become the third US state to officially ban social casinos, with a bill to ban the vertical now only a signature away from becoming law.
Senate Bill S5935A, introduced by Sen. Joseph Addabbo in March, passed through both the Senate and Assembly without much opposition. It specifically targets online sweepstakes games, making it illegal to operate, conduct, or promote them within the state. The proposal also extends its reach beyond just operators, imposing restrictions on various service providers that support sweepstakes gambling.
This includes payment processors, financial institutions, content suppliers, media affiliates, geolocation services, and platform providers. By eliminating the entire infrastructure that allows these platforms to operate, New York lawmakers are aiming to effectively eliminate their presence.
Penalties for breaching the new law are also significant, ranging from $10,000 to $100,000 per offence to the revocation of existing gaming licenses. Enforcement will be a collaborative effort involving the New York State Gaming Commission, the State Police, and the Attorney General’s office. Only last week, the New York AG’s office issued cease and desist orders to 26 sweepstakes casinos, now it’s hoping that the ban becomes official.
Bill Outlines Concerns with Sweepstakes
In the proposed legislation, Sen. Joseph Addabbo laid out the dangers he believes sweepstakes casinos would bring to the state. He stated that these platforms operate outside New York’s established consumer protection laws, responsible gaming practices, and anti-money laundering regulations.
Furthermore, they operate without a license and are not subject to taxation like legal gaming operations, posing an economic risk to the state’s regulated gaming industry. This industry not only generates substantial tax revenue but also complies with rigorous oversight.
Should Gov. Kathy Hochul sign the bill into law, New York would join the ranks of Montana and Connecticut as states that have clearly banned sweepstakes casinos.
Sweepstakes Trade Groups Encourage Governor to Veto Bill
It “threatens to kill investment, stifle innovation, and undermine New York’s position as a national leader for tech and digital entertainment,” were the words of a Social and Promotional Games Association (SPGA) spokesperson, who released a statement calling on the governor to reject the proposal.
“Nearly every form of online gaming we know today, including companies like FanDuel, a New York-based success story, began as pre-regulated concepts. This legislation criminalises that innovation cycle.
“We strongly urge Governor Hochul to veto the legislation and protect the very spirit of innovation that has made New York a leader in tech, gaming, and entrepreneurship,” the trade body concluded,” the spokesperson added.
The newly formed Social Gaming Leadership Alliance (SGLA) also shared its disappointment with the proposal. According to the group, the law could restrict access to popular free online games enjoyed by millions, including many New Yorkers.
Jeff Duncan, the SGLA’s executive director and a former U.S. Congressman, criticized the legislation for being based on a misunderstanding of the social gaming landscape. He suggested that certain stakeholders, who stand to gain from the elimination of these games, had an unfair influence on the push for the bill.
Duncan also raised concerns about the broad powers granted to the New York Gaming Commission, fearing that it could limit the use of common promotional tools, which might negatively impact local businesses and the state’s economy.
Furthermore, the exec pointed out that lawmakers had voiced serious questions during discussions about how the law would be enforced, how compatible it is wth federal regulations, and its potential effects on legitimate promotional campaigns.
He closed by warning that the proposed law could blur the lines between legal sweepstakes and illegal gambling, which could be risky for the entire sector of digital entertainment, particularly if consumers are provided with meaningful protections or alternatives.
Source: NEXT.io
