iGaming Weekly Recap (February 17–23, 2025): Sweepstakes Debate is Far from Over

Vermont lawmakers are reevaluating the state’s stance on gambling, with a new bill proposing a rollback on legalized wagering. House Bill 133 seeks to repeal legislation governing the state lottery and online sports betting. Supporters of the bill argue that sports betting revenues disproportionately come from low-income residents and that the state’s profits have fallen short of expectations. Vermont legalized online sports betting in January 2024, generating $198.7 million in handle during its first year. Notably, 30% of wagers were placed by out-of-state bettors. Despite this, concerns about the economic benefits versus the potential social risks of gambling continue to grow. The bill is currently under review by the House Committee on Government Operations and Military Affairs and must clear several legislative hurdles before reaching the governor’s desk.

Hawaiian lawmakers have rejected a proposal to legalize land-based casinos due to strong public opposition and concerns from government agencies over potential negative impacts. However, the state Senate is currently reviewing two bills that would legalize online gambling: SB 1569 for sports betting and SB 1507 for online casino gaming. SB 1569 proposes a 10% tax on gross gaming revenue, while SB 1507 would allow online slots, table games, and poker. Despite legislative progress, the online sports betting bill faces pushback from the Honolulu Police Department and the state attorney general. Hawaii remains one of only two states with a total ban on gambling.

Alabama’s efforts to expand gambling are losing momentum in the state Senate, with the bill’s chances of passing dwindling. Senator Greg Albritton has acknowledged that there isn’t enough support to push the legislation through in the current session. Negotiations with the Poarch Band of Creek Indians (PCI) are ongoing but have yet to yield a breakthrough. Despite PCI’s acquisition of Birmingham Racecourse, the political landscape remains unchanged. The bill is still a few votes short of approval, and conflicting views among state lawmakers continue to stall progress.

Texas Lt. Governor Dan Patrick is raising serious concerns about online lottery courier services, questioning their impact on fairness and transparency. He argues that these platforms undermine the original purpose of the state lottery and could facilitate financial crimes, including money laundering. To emphasize his stance, Patrick visited Winners Corner TX LLC in Austin, where an $83.5 million winning ticket was recently purchased. He is pushing for an investigation and regulatory changes, even suggesting he may block the reauthorization of the Texas Lottery Commission if the issues remain unresolved. Companies like Jackpocket, which has ties to DraftKings, defend their operations, stating they comply with state laws. Meanwhile, the Texas Lottery Commission admits it lacks authority to regulate these services. Patrick is also calling for an independent investigation and legislative action to prevent potential fraud.

For the fourth time, U.S. lawmakers from both parties are making a push to eliminate the federal excise tax on sports betting. They argue that this outdated levy, known as the “handle tax,” unfairly burdens legal operators while giving illegal bookies a competitive edge. The tax, originally introduced in 1951 to combat illegal gambling, imposes a 0.25% fee on all wagers and a $50 annual charge per sportsbook employee. With legal sports betting now widespread across the U.S., legislators believe these costs are unnecessary. Previous attempts to repeal the tax have failed, but supporters remain optimistic that the continued growth of the legal betting market will sway more members of Congress.

Bonus: “We’re Not Done Yet”

With recent changes at the CFTC ensuring prediction markets have some breathing room, industry attention has shifted back to sweepstakes casinos. Last week, we covered Mississippi’s aggressive push to ban sweepstakes operators entirely. To recap, Senate Bill 2510, which increases penalties for illegal online gambling under the guise of sweepstakes, passed the Senate with an overwhelming 44-1 vote.

The Social and Promotional Games Association (SPGA) quickly condemned the decision, stating: “The SPGA is deeply disappointed by the Mississippi Senate’s decision to advance SB 2510, which unjustly targets sweepstakes and conflates a safe and legal form of entertainment with illegal operations… Voters deserve better than lawmakers who prioritize the protection of a slot machine maker over individual freedom.”

Operators on the Defensive

Despite SPGA’s strong opposition, Virtual Gaming Worlds (VGW) seems to be reading the writing on the wall. The company has raised the minimum age for its casino and poker platforms to 21. The change was phased in—starting February 12, players under 21 could no longer purchase Gold Coins, and by February 19, they were fully restricted from all games and from using Sweeps Coins.

High 5 Casino is also taking preemptive steps to stay off legislative radars, withdrawing from several states where online casinos are already regulated, including Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia.

Meanwhile, Connecticut and Maryland are preparing their own regulations to restrict sweepstakes casinos, and West Virginia Attorney General JB McCuskey is reportedly drafting subpoenas as part of an upcoming crackdown, according to Casino Reports.

SPGA doubled down on its criticism, stating: “West Virginia Attorney General JB McCuskey’s actions do a disservice to West Virginians by ignoring the reality: Social sweepstakes are a legally compliant form of entertainment that gives players more choice, and as regards SPGA members, enables digital entrepreneurs, and creates high-skilled American jobs. Protecting consumers means embracing innovation, not stifling competition under the guise of concern.”

The battle over sweepstakes casinos is heating up, and with more states stepping into the ring, this fight is far from over.

There’s no denying it—sweepstakes operators have been pushed into a defensive stance in recent weeks. And the pressure isn’t letting up.

The Industry Strikes Back

The latest blow came from the American Gaming Association (AGA). AGA CEO Bill Miller accused sweepstakes operators of skirting state regulatory frameworks, claiming they use “legal gymnastics” to avoid being classified as gambling.

SPGA quickly fired back, stating:

“Properly operated sweepstakes are legal in almost all states. SPGA members operate within well-established legal frameworks that contrast starkly with black-market offshore sportsbooks and casinos.”

“The AGA knows that social sweepstakes sites don’t directly compete with traditional real-money online casinos, a fact supported by research from both Eilers & Krejcik Gaming and Macquarie.”

“Most social sweeps sites have tools in place to allow consumers to control their play and pay some form of state tax, such as sales or corporate tax.”

Adding to the debate, Howard Glaser, Global Head of Government Affairs and Legislative Counsel at Light & Wonder, took to LinkedIn, commenting that “a group of unregulated gambling operators today attacked the American Gaming Association.”

Glaser also pointed out a key contradiction: While SPGA continues to defend sweepstakes legality, the recent moves by operators like High 5 Casino, exiting states with regulated online gambling, suggest otherwise.

“As always with unregulated operators, watch what they do, not what they say – and in this case what they are doing is fleeing US states and Canadian provinces at an accelerating rate without any attempt to defend their product as legal.

The geography is shrinking, not expanding.

If the “gee, we’re legal, guys!” argument was more than just a post on social media, the operators would make it to the regulators.

Instead, they head for the (electronic) border and squeeze what they can out of the remaining markets – at least until the jig is up there, too,” wrote Glaser on LinkedIn.

The battle over sweepstakes casinos is heating up again in 2024, this time with even more intensity. While there are some bright spots, like ongoing talks in New York and New Jersey about regulation instead of outright bans, the overall landscape isn’t looking great. Sweepstakes operators are taking hits on multiple fronts, and lately, their moves have been more about defense than offense.