Tribes and Commercial Operators Unite Against Sweepstakes Gaming

By Todd Winkler,
Editor at online-gambling.com

Todd Winkler Editor at online-gambling.com

Todd Winkler is another one of our highly professional editors at online-gambling.com. The expert has been part of our team for 6 years, during which time he contributed articles regarding poker, blackjack, and DFS. Winkler is also knowledgeable about New Zealand's legal gambling market.

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Last updated: November 11, 2024

An unexpected alliance might be coming against sweepstakes casinos. Representatives from Indian Country and the Sports Betting Alliance (SBA) met on October 23, 2024, to consider a joint approach to unregulated platforms that jeopardize consumer safety and revenue. Now, once rivals are calling for regulatory action to address the growing concern within the gambling industry.

A Surprising Alliance Emerges

Native American tribes and the Sports Betting Alliance (SBA), formed by giants like DraftKings, FanDuel, and BetMGM, are joining forces to fight sweepstakes gaming. This alliance was unexpected, and understanding it requires a look back at past events.

In 2022, California tribes and the SBA were fiercely opposed to Propositions 26 and 27, with both sides spending close to $500 million in a heated battle to control sports betting in California. The tribal-backed measure, Proposition 26, focused on retail sports betting, while Proposition 27 sought statewide digital betting under commercial control. The tribes won, and Proposition 27 was defeated.

Sweepstakes casinos operate in a legal gray area, letting players use virtual currency to win real-money prizes. Often bypassing state regulations, these platforms avoid paying taxes. Traditional operators and tribes are taking notice, as sweepstakes cut into their revenue and pose hidden risks for players.

Understanding the Threat of Sweepstakes Platforms

Sweepstakes casinos have rapidly grown into a billion-dollar business operating largely outside regulatory reach. Unlike licensed sports betting and casino sites, sweepstakes sites are often unregulated. The problem is that these platforms offer free games but allow users to buy virtual coins, which makes them similar to traditional gambling.

For regulated operators, this setup feels like an unfair advantage. Victor Rocha, founder of Pechanga.net and an advocate for tribal gaming, says these unregulated platforms dodge the hefty fees and taxes required of licensed companies. SBA lobbyist Jeremy Kudon added that while legal sportsbooks in states like New York pay a 51% tax on every bet plus a $25 million licensing fee, sweepstakes sites bypass these costs, diverting users from legal operators.

There’s also concern about consumer risk. Sweepstakes sites lack regulation and may fall short of protections like age verification, responsible gaming protocols, and secure payments. Tribal and commercial operators alike say states should act to protect consumers and ensure fair competition in the gaming industry.

Key Figures Driving the Fight Against Sweepstakes

Key voices in this alliance include Victor Rocha, Jeremy Kudon, and Jason Giles, executive director of the National Indian Gaming Association. Together, they’re working to inform industry leaders and lawmakers about the impact of sweepstakes gaming. Rocha, for instance, was struck by how quickly these platforms have expanded, which he observed at the recent Gaming Global Expo. He now plans a series of webinars to discuss the issue further and engage more supporters.

Kudon highlighted that sites like Fliff and VGW’s “Chumba” operate within the US but avoid many of the rules that apply to licensed gaming, giving the impression of legitimacy while sidestepping oversight. Both he and Rocha hope that raising awareness of these practices will encourage state attorneys general to consider regulatory options.

Going forward, Rocha, Kudon, and their peers are pushing for measures for sweepstakes operators to obtain licenses and pay taxes, creating a more balanced environment for all operators. Rocha foresees a future where unlicensed platforms are held to the same standards as regulated companies.