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Across the US, in states where cash online casino games are banned, the sweepstake operator has risen to prominence. Using a loophole similar to that used by the game Pachinko in Japan, they run under the laws governing lotteries, making them perfectly legal.
In the last ten years, the evolution of the online casino has been rapid and vast. It is now at a point where it is birthing new gaming genres like crash gaming and live game shows. Yet one curious offshoot has been the Sweepstake casino. Providing online table games and slots to locations where online cash casinos have been banned, they have drawn the attention of the tribes. But do they pose a threat to tribal casino laws, and can they work alongside each other?
What Makes a Sweepstakes Casino Different from Real-Money Gambling?
The law governing online casinos differs drastically from state to state. In some places, any sort of gambling online may be banned. The next state may allow sports betting but no casinos, whereas the next state may allow all. This leaves many players in states where casino games are outlawed to seek offshore operators. However, this is technically against the law and can result in penalties.
A sweepstake casino manages to get around this by falling under laws that govern sweepstakes and lotteries. They don’t have you playing for money but instead use digital tokens. These can later be traded in for prizes.
Players can also take part in games for free, without having to make deposits. The best sweepstake casinos will have all the games you expect, such as slots, blackjack, and roulette along with crash gaming. However, they will also provide introductory coins upon sign-up, allowing people credits to play games with.
The Legal Landscape for Online Sweepstakes in Indian Country
In many states in which tribal law is enshrined, even sports betting is not legal. California is a great example of this. Here, tribes have the exclusive right to gaming. They have even been given the go-ahead to sue the city's card rooms, such is the extent to which this protection must be maintained.
Sweepstakes casinos are proving a worry, as they are often unregulated and untaxed. This has been an issue for people in tribal areas. Many have seen it as a system that will take money and players away from their casinos.
Eyes are now on the tribes as the only people who may be able to enforce regulation of the sector. Casinos are viewed as unlicensed and unregulated, much the same way that offshore operators have been in the past. However, this is not entirely true as many of them are run by the same companies that operate standard online casinos and follow the same practice and protocol.
The California Nations Indian Gaming Association (CNIGA) has already begun to send cease and desist letters to app stores such as Google and Apple. This has been to tell them that they are selling what are in effect unlicensed platforms. It is not yet known if legal action will follow.
Legal battles for the tribes to uphold their rights to provide gambling are nothing new. In Colorado, a recent legal battle began between the state and two tribes who wanted to offer digital gaming off the reservation. Florida has also seen similar issues. The Seminole Tribe wished to do the same but was knocked back and denied an appeal.
The Best Sweepstake Casinos and How They Work
In a standard online casino, players use cash to play games. They put a certain amount into the operator's website, then use it for table games and slots. In a sweepstake casino, games are free to play and use digital coins. These coins can be acquired on sign-up, through signing in each day or even winning the game themselves. Games start off free to play, but more coins can later be purchased.
The gold coins are fairly standard and are used for fun play. They have no cash value and can’t be redeemed. However, the second coin, known as the sweepcoin, can be redeemed for real prizes. These can only be won, not bought directly. It is this method that allows the casinos to comply with the US law on sweepstakes.
The field is so new, that it is hard to get figures on how many people are using these. The industry is expected to grow to $6.9bn by the end of 2025, showing a sizable increase. Yet how that is impacting physical casino revenue is unknown.
It is hard to see how the tribes and sweepstakes casinos could work together. The big fear is that sweepstakes casinos will take revenue from casinos on reservations. However, there is also little information on them and their impact, so in-depth studies need to take place.
However, it could actually be a blessing. In places like Florida and Colorado where the tribes are trying to instigate digital gaming outside of the reservations, it may be a tool they can use. Responsible sweepstake operations could be a way to increase revenue while complying with state and federal laws.