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Legislators in Tennessee just delivered a powerful hit to the online sweepstakes sector. Without an argument, the Senate Commerce and Labor Committee voted unanimously yesterday, making the score 8 to 0. Senate Bill 2136 is sent straight to the Senate floor as an outcome of this vote. Lawmakers want to completely erase platforms that offer casino-style games through complex dual-currency loopholes.
Defining the Scope of the Prohibition
Senate Bill 2136 targets any entity that operates, conducts, or commercially promotes online sweepstakes or app-based gambling products within the state. The approach of the bill casts a wide net, extending beyond the operators themselves to include payment processors and any other organizations that process these transactions. By labeling these activities as offenses against public health and safety, the legislation provides a legal framework for strict enforcement.
If the bill prevails, violations will result in a variety of legal consequences. These are restraining orders and private lawsuits, alongside potential criminal penalties. The measure also empowers state regulators to monitor existing sportsbook licensees. If authorities suspect a licensed sportsbook of offering sweepstakes-style products, they gain the specific right to investigate those operations under the new law.
Expanding Enforcement Powers
A key component of the legislation involves an amendment that Senator Haile introduced shortly before the committee vote. This amendment grants the Tennessee Attorney General’s Office explicit civil enforcement authority. Currently, the state often relies on criminal statutes to address unauthorized gambling. This change allows the Attorney General to seek civil injunctions against operators who currently fall outside the scope of civil enforcement despite existing criminal prohibitions.
This push for stronger enforcement follows a period of active litigation by Attorney General Jonathan Skrmetti. Last year, Skrmetti’s office issued nearly 40 cease-and-desist letters to various sweepstakes operators. These actions successfully delayed several platforms, including popular names like VGW and MW Vegas.
Protecting Regulated Markets
While the bill is dedicated to eliminating sweepstakes platforms, it carefully protects other forms of legal gaming. The legislation maintains clear exceptions when it comes to the Tennessee State Lottery, licensed online sports wagering, and daily fantasy sports. It also permits authorized nonprofit organizations to continue their annual charity events as sanctioned by the General Assembly.
The legislative push reflects a broader argument among policymakers that sweepstakes platforms operate as “shadow” casinos. Because Tennessee does not permit retail or online casinos, these platforms use a dual-currency model to reach local players. Users buy virtual “gold coins” for social play but receive “sweep coins” that they can eventually redeem for cash. Regulators argue that these platforms divert tax revenue away from the state while failing to meet the consumer protection standards required of licensed sportsbooks.
A National Shift in Gaming Regulation
Tennessee is not alone in its search for stricter gambling definitions. Several other states currently weigh similar restrictions on the sweepstakes model. The final version of a bill that would set fines on providers and players is now being finalized by Indiana lawmakers. In the meantime, Maine and Maryland are considering their own legislative initiatives to deal with the same problem.
As the legal landscape shifts, many large sweepstakes operators have already proactively exited more than a dozen state markets, including Tennessee, to avoid potential litigation. With the Senate Bill 2136 now on the Senate floor, the House version of the bill (HB 1885) is on hold until a hearing in the House Departments on March 3. If both measures prevail, Tennessee will join the growing list of states that have shut the door on the sweepstakes gaming model.
Source: The Tennessee General Assembly
