Following a public hearing of the DC bill 260656, it looks like council members are moving to legalize online casinos and ban dual-virtual-currency platforms. There seem to be two reasons for this: better protections for players and tax revenue.
This essentially means a Washington DC sweeps casino ban, as these platforms currently operate using a dual-virtual currency model. If this goes ahead then 20 sweepstakes casinos will have to stop operating in DC. On the other hand, it also means that players could access regulated online casinos, who will all have to pay a 25% iGaming tax.
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An update on whether DC will ban sweepstakes casinos
The state regulations around igaming and all the platforms that come under this umbrella are constantly changing. Since platforms like sweepstakes casinos arenât protected at a federal level, this means that each state decides whatâs allowed and whatâs not. In Washington DC, sweepstakes casinos are not strictly banned. However, that may all be about to change following a public hearing that saw council members argue that platforms like legal social casinos should be banned, and traditional real money casinos should be legalized. The proposal was largely driven by the fact that online casinos are federally regulated which means that it’s much easier to identify which ones are adhering to regulations and which ones arenât.
But it does seem like the real reason for the proposal is to bring more income into the state. You see, all online casinos are required to pay taxes in the states that theyâre operating. These usually sit at 25% and are paid for by the company themselves, not by the player. Although any profit gained from online gambling is also subject to tax, that’s a whole different conversation. The councilâs idea is very simple: legalize online casinos and require them to pay a 25% tax directly to the Office of Tax and Revenue. This will be more efficient than the system that exists elsewhere where the tax is paid directly to the District Treasurer instead.
So although on first appearance it looks like Washington DC is trying to introduce an additional tax, theyâre actually just looking to change the way that the tax is paid. As far as we could tell, there were no proposals to change the rate itself. Regulators have also suggested that there be a 2% regulatory assessment for admin costs, and a 2% community impact assessment. Both of these would provide the necessary resources to ensure all of the online casinos are regulated, mitigating any risks surrounding unregulated sites.
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Now back to the potential banning of sweepstakes casinos. The council member argues that there are over 20 sweepstakes casinos currently operating in DC, but it’s a legal âgrey areaâ because the laws arenât specific enough. Essentially what this means is that sweepstakes casinos can operate in DC, but that the lack of regulations and strict laws weakens the protections available for players. The key impacts of this bill highlighted by the council member are:
Strengthening consumer protections
Preventing unlicensed platforms from operating in the state
Ensuring that all licensed operators are paying the appropriate taxes and fees
Itâs not unsurprising that in the move to make online casinos legal, will also at the same time ban sweepstakes casinos. This is a move that weâve seen happen in other states over the past couple of months. There are very few states where both sweepstakes casinos and online real money casinos operate at the same time, in fact there are only two – New Jersey and Pennsylvania. Overall, states either ban online gambling completely, leaving space for sweepstakes casinos to be available, or they allow online casinos and therefore, sweepstakes casinos are banned. There is also a third option with states that explicitly ban for online casinos and sweepstakes casinos, but they tend to be quite recent bans that have come into effect for the latter.
Conclusion – Sweepstakes casinos not banned yet in DC
Overall, it looks like DC may be pushing to legalize online casinos, which would then lead to sweepstakes casinos no longer being available. At this stage, the bill is still in discussion, and no final decisions have been made. If this were to become the case, then 20+ sweepstakes casinos would have to stop operating in the DC, or face hefty fines. The flip side of this proposal is that any tax revenue from legal igaming platforms, should be paid directly to the tax office, rather than the District Treasurer. Thereâs also a suggestion for additional fees to cover the cost of regulating the online casinos, should they be made legal.
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