New York Cracks Down on Sweepstakes Casinos With C&D Blitz

In more sweepstakes-related news, New York Attorney General Letitia James announced today that she has filed 26 cease and desist letters against Sweepstakes Casino in an effort to rein in the increasingly popular online gambling replacement. Ms James pointed to New York State statute that she says explicitly makes it a crime to gamble for anything of value, including redeemable sweepstakes coins.

The dual currency system used by most sweepstakes casinos has landed them in hot water in several other states, and Montana was the first state to ban the use of dual currency sweepstakes casinos last month. Both Connecticut and Louisiana have also passed laws outlawing what they called faux casino games and are waiting on their governors’ signatures to make them law. 

In other states, Attorney Generals have decided not to wait for explicit new laws to be added to the books and have instead chosen to use existing laws and regulations to file cease and desist letters to sweeps operators, threatening them with fines or even jail time if they continue offering games which resemble slots, blackjack and virtual scratchoff tickets. 

Maryland, Pennsylvania, New Jersey and a half a dozen othr states have sent out a dozen or more of these letters each so far this year, but the issue is the ever-increasing number of new sweeps operators can make this feel like a whack-a-mole solution, as well as some pernicious operators simply returning with new corporate idenetities.

In New York, while Ms James and New York Senator Joseph Addabbo took a victory lap in a press release Friday, the actual Cease and Desist letters had been sent on March 7th, more than three months ago. Many, if not most, of these sweep operators had already pulled up stakes in the Empire State months ago. Industry leader VGW, which owns Chumba and Lucky Land Casinos, had described “ongoing dialogue” with state officials. However, it now appears that they were ordered to cease operations no later than 28 March.

In recent announcements, VGW has stated that it will begin winding down its operations in June, with all accounts being frozen on July 2, and transitioning to free-to-play games only by August. This would appear to mean that VGW’s “dialogue” consisted of its lawyers fighting a rear guard action on the C&D letters until the end of the Summer. 

Meanwhile, Senator Addabbo Jr, who filed Senate Bill 5935, which would have outlawed Sweeps casinos in the State way back in early March, seems a bit jubilant for a powerful senator who watched his legislation wither on the vine over the Spring and into the Summer.

The Chairman of the Committee on Racing and Gaming and Wagering almost certainly did not foresee that his bill would still be held up in Committee with the legislative session in Albany ending in four days. Still, he had this to say about the industry he had attempted to outlaw. 

“At a time when illegal gambling, underage participation, and identity theft are soaring, it is deeply concerning that prohibited, unregulated, and unenforceable gambling entities are providing easy access to illegal gaming sites and obtaining personal information of unsuspecting New Yorkers,” Senator Joe Addabbo Jr.

Which we suspect means that he will take another run at the Sweeps industry next year, despite the progress made by the Attorney General so far. New York’s legal offensive is just the latest in a national trend aimed at shutting down dual currency sweepstakes operators.

While AG James has certainly sidelined some of the bigger players in the industry, their demonstrated ability to rebrand and resurface suggests that it will take more than enforcement, but almost certainly new legislation, if the State is serious about stopping Sweeps. Expect Addabbo back with a new bill next session.