【888poker support】Alternative and ‘controversial’ betting will thrive, even as legislative tug of war intensifies

In the US, regulation has somewhat hit the brakes in recent times. After New Jersey and Delaware regulated online casino in 2013, only five states have since followed suit. This stagnation, brought about in part due to the regulatory focus shifting to sports betting since the Professional and Amateur Sports Protection Act (PASPA) was overturned in 2018, has led to a lack of innovation within the more traditional world of online casino.

Birth of sweepstake casinos

Sweepstake casinos have been borne out of the immensely popular social casinos enjoyed by US-based players across many years, with more than $40bn being wagered in the last decade. This has led to a growth in operators offering social casinos with a sweepstake mechanism, allowing players to play without a purchase and earn sweep coins redeemable for cash. Players who enjoy this specific game genre will likely be familiar with operator names such as Chumba and Stake.us. This year, sweepstake casinos could generate up to $11.4bn in player purchases and at least $4bn in net revenue, according to research from Eilers & Krejcik Gaming.

A new grey area

The vast majority of sweepstakes casino players do not wager money, with no purchase necessary. This means, in theory, they should present very few issues from a regulatory standpoint. The current landscape, though, has a very different wind blowing across it. Longstanding legal and operational differences between sweepstakes gaming and gambling are now being hotly contested with some states advancing arguments, proposals and even bills which would essentially criminalise legitimate business activities that entertain millions. If you think I’m being overly dramatic, just take this month’s proposed Florida Senate Bill whose submission effectively mixes sweepstakes games in with “internet gambling” and “internet sports wagering”. Whichever side of the fence you reside on, were these aggressive efforts and bills to pass, a radical reversal of established promotional sweepstakes laws would be underway.

For now, though, sweepstakes remain legally accepted in 48 US states, with Washington and Michigan being the only states that have specific prohibitions against them. Idaho, meanwhile, does not allow players to win cash prizes from sweepstake casinos.

Truth be told, the surge in popularity of sweepstake casinos has led to this ongoing dispute between the American Gaming Association (AGA) and the advocacy body for the category, the Social and Promotional Games Association (SPGA). For more recent history, back in February, AGA CEO Bill Miller accused some sweepstakes casinos of attempting to “exploit legal loopholes” as part of a wider illegal market.

The SPGA responded by 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.”

Last December, the SPGA launched a Code of Conduct, designed to spotlight the processes and technologies already in place at both SPGA member sites and the majority of social casinos offering promotional sweepstakes. Members must submit to policies such as:

– Age verification to limit purchases to users 18 and older

– Proper identity verification (Know Your Customer or KYC)

– Location verification of customers

– AML policies to ensure proper transaction monitoring

While more specified regulation of this space is yet to materialise, this can be taken as a desire for this fledgling market to operate responsibly.

The latest trend

Whenever regulation is lacking, there will always be the possibility of a new product type that falls into a legal grey area. The latest of which is prediction market event trading, which has recently forayed into sports markets. Attention was placed on these sites in far greater detail last year when Kalshi began offering markets on the US presidential election. Kalshi was able to do this, despite a legal challenge from the US Commodity Futures Trading Commission.

This was taken a step further after the turn of the year when Kalshi began offering markets on the Super Bowl. These sites, which also include Crypto.com among their number, are federally legal and do not pay gaming taxes.

Prediction market operators may have a more explicit crossover with betting than sweepstake casinos, but this is another sign of how there will always be potential issues outside the realms of current regulation.

The pricelessness of experience

For all these platforms, be it DFS, sweepstake casinos or sports futures, the value of having experienced suppliers on board cannot be understated.

When it comes to offering fledgling gaming products or products that are growing in popularity, operators can benefit from having experienced operational development help along the way, especially when it comes to launching certain projects and building apps. All these platforms need expertise in building products that are not only fun and engaging, but also meet responsibility requirements.

This is where The Unit comes in. We can use our deep experience in designing and building digital casino and sports betting products to ensure our partners are fully prepared for all the challenges that come with launching in a new market and building out a new product offering to anticipate consumer demand.

What happens next?

Going forward, we would expect to see the popularity of sweepstakes casinos continue to grow, primarily in the US, while the regulation of online casinos is stagnant and largely confined to smaller states, bar Michigan. Yet, as with any unfolding market where the future isn’t clearly defined — and vested interests with deep pockets could win the ear of more US lawmakers — firm predictions are for the birds. What we can say for sure, though, is that agile technology and flexible products will invariably open the door to potential success.

Broadly speaking, the world of sports betting and iGaming is in a considerably advanced position compared to 15 years ago, when Nevada was the only state with fully legalised sports betting and no states had regulated iGaming. Even with the regulation we have seen since, other adjacent products are still finding their place (and raising eyebrows along the way).

With the right supplier on board, operators across all these product types can bring a thrilling experience to players, while also adhering to customer protections. When states regulate, operators will have to make sure they are fully compliant and possess the type of offering that can be easily rolled out into any new environment.

Another possibility is that states could take a different approach: properly operated social sweepstakes that pay state taxes. After all, killing off this revenue stream for states may not be sensible when many are running a deficit. Another approach would be to bring in regulations, higher taxes and/or registration fees for sweeps sites which are currently being played by millions of American adults. New Jersey, always a forward-looking state when it comes to gaming, looks to be taking this route. In short, the idea that states could regulate, and increase state taxes, for a product that no-one needs to pay to play is a strong one.

Paddy Casey is the co-founder of The Unit with over 15 years’ experience in the iGaming industry as a product and commercial leader.

The Unit is an experienced product development and design company, headquartered in Ireland, which builds innovative products and solutions for the sports betting and igaming sector that drive performance and engagement. Its unflinching focus on creating world-class products that are efficient and scalable sets The Unit apart in meeting the evolving needs of the industry.