After Florida announced it was suing VGW and Stake.US over its sweepstakes casino operations, notable gaming executive F Steven DiMasi predicted more U.S. states would take similar action.
On August 19, Florida Attorney General James Uthmeier announced a lawsuit against two of the largest sweepstakes casino operators in the country. Uthmeier filed two separate suits in a Tampa state court.
That same day, F Steven DiMasi, Senior Vice President of Global Government Affairs and Business Development at Light & Wonder, posted on LinkedIn that the industry could expect more states to follow suit.
In a LinkedIn post, DiMasi stated,
“(Sweeps operators are) never going to win a battle in the court of public opinion with state legislators either. Because the core argument is, ‘We want people to be able to gamble, but we don’t want to face gambling regulation.’ It’s not a winner.”
F Steven DiMasi’s opinion is considerable. Light & Wonder was known as Scientific Games until 2022. It owns several major game developers, including Bally Gaming, WMS Gaming, and Shuffle Master.
Florida’s AG took a page from Kentucky in filing suit. As the second most important sweepstakes casino market behind California, many states will take a page from the Sunshine State.
The same happened when California itself created a sweepstakes casino ban that targeted third-party service providers and online influencers.
Several states have since added payment providers, game content creators, geo-located tech companies, affiliate marketers, and social media influencers to their list of those who might be prosecuted or fined.
A handful of states, such as Minnesota and Illinois, have sent cease-and-desist letters to top operators. Most states have preferred to use legislative action.
New York, Indiana, Oklahoma, and Louisiana are among the states that have passed bans on dual-currency sweepstakes sites in the past calendar year. Maryland failed in a similar attempt.
Attorneys general who file lawsuits are more aggressive and harder for the sweepstakes industry to predict. Legislative actions take months to crystallize.
Peter Hammon, Senior Counsel at Vela Wood, a Dallas-based boutique law firm, recently said,
“The sweepstakes industry under the previous model — dual currency — is dead. It will never come back in any meaningful capacity as a legal product.”
Operators have reoriented their business models to offer a similar product, but with single-currency banking methods. That could expose companies to more direct charges of online gambling, so many have exited markets that have banned sweepstakes contests.
As more states fall off the board, companies may need wholesale new approaches. Some sites have shifted toward more skill-based gaming, such as speculation in secondary-market digital trading cards or loot boxes.
Others have switched customers to social casino sites with “entertainment only” components. Two sweepstakes betting sites, Onyx Odds and Fliff, have filed to be registered as prediction markets, though regulators will take 6 months to a year to approve them.
