Same Regulatory Oversight and Taxes
The new measure would place sweepstakes operators in the same category as real money providers in New Jersey regarding regulation and tax payments. The bill comes at a time when sweepstakes sites are under immense pressure due to US lawmakers calling the services illegal since they are unregulated.
The Social and Promotional Gaming Association (SPGA) is the trade body representing the sweepstakes industry that recently spoke with NEXT.io, stating they welcome the new bill. The Association and its members support clear regulations so that all players can enjoy a transparent and responsible experience.
The SPGA stated that the bill aligns with the association’s core objective of reinforcing the legality and legitimacy of social sweepstakes games.
More Details of the Measure
Assembly Bill 5196 defines online sweepstakes casinos as platforms featuring gambling-style games via free currency. Sweepstakes sites are known for operating with Gold and Sweeps Coins, or their equivalent. The coins are provided free upon signup and then earned via gameplay or promotions.
Sweeps Coins can be redeemed for real prizes, such as gift cards or bank transfers. Under the proposed law, operators can function normally but will need a license and complete a third-party audit every six months to ensure finances and operations integrity.
A physical partner would also be required, with operators signing deals with casinos in Atlantic City. Of course, this would give the land-based partner a cut of the profits.
The Division of Gaming Enforcement would oversee the industry and have the power to take action on unauthorized sites. Illegal operators would face penalties of $1,000 per day per player for allowing unauthorized services. Advertising for unauthorized gaming would cost much more, at $10,000.
Once licensed, sweepstakes casinos in New Jersey would be restricted to players 21 and up. Players would need to complete age verification and other identity requirements.
Sweeps sites would also be subject to licensing fees and taxes on gross earnings, something they don’t have to do now.
Will It Pass?
Such a bill would set a precedent for the sweepstakes gaming industry, especially if the first measure is passed in New Jersey. However, due to the power of the real-money gaming industry, there are mixed feelings about whether the bill will make any headway.
Sweepstakes sites would be major competition as the brands are free to join and do not require a deposit. Real money sites require funds to play games, and players could spend less at sweepstakes sites. Is that simple fact enough to push top operators like BetMGM and Caesars to fight the measure?
