With the online gambling industry booming worldwide, most American states have to wait to fully get in on the action. That’s because only a handful of states have legislation in place that legalizes online gambling.
However, as with most industries, at the intersection of business and the law, there are usually ways to get around them if you’re inventive enough. In this case, the work-around for almost every state aside from Washington, takes the form of sweepstakes casinos. So long as the minimum regulatory rules are complied with, sweepstakes casinos are indeed 100% legal.
What’s the Difference?
The key determinant between an online casino and a sweepstakes casino is that the former is played for real money. As a result, real money casino games, and, in particular, online slots, are extremely popular among gambling enthusiasts. According to Scott Nicholson, since games like those on this slots guide vary according to factors like their Return to Player (RTP) scores, the best ones are not just entertaining but also mathematically more likely to result in real money prizes.
That’s why players should always consider high payout slot machines online. Even when it isn’t a slot game, most online gambling platforms usually provide free bonus bets and spins, and other incentives for players. When all of these things are considered, it’s difficult to see why sweepstakes casinos are able to exist at all.
To understand it, one needs to first understand how the regulatory framework operates for each of them. When it comes to online casinos, in most states, online gambling is either banned outright or lacks legislation to legalize it. This means that no licensed online casinos can be registered or legally operate in the state.
This is where sweepstakes casinos come in. The key difference between them is that sweepstakes casino games cannot be played for real money. Instead, these platforms offer players the chance to play for free to win and accumulate tokens known as “Sweeps Coins”, although this phrasing can differ from platform to platform.
While players can play for free, they are given the option to purchase further tokens or virtual in-game currencies if they are running low and wish to keep playing. In some instances, as a “gift”, players are then given Sweeps Coins which can later be redeemed for real money cash prizes. This may all seem a little unnecessary, but there’s a good reason why sweepstakes casinos are obliged to operate in this way.
There is another caveat to consider – crypto casinos. Sites like Solana Casino Ltd and countless other platforms that accept crypto deposits can circumvent traditional gambling restrictions in most states in the US. That means that players looking for real money gambling have this opportunity and don’t have to rely on sweepstakes casinos.
The Legal Aspects
In order to ensure that a sweepstakes casino isn’t operating like a real money online casino, certain state and federal laws must be adhered to. One of these has to do with how the word “lottery” is defined and what requirements must be met to qualify as one. According to the American Bar Association, “lotteries” must meet the following three requirements:
Games must be chance-related and not reliant on skill.
The prizes won must have value.
A player must pay money, or purchase a service to enter.
The third element is where sweepstakes casinos find their legal basis. Since their games are accessible and playable for free, the element of consideration is lacking. As a result, players can never directly pay to play, nor win real money directly from the game. At the same time, sweepstakes casinos are still able to offer conventional casino games like blackjack and poker.
Further Compliance
So long as the core legal tenets are met, sweepstakes casinos may operate legally, and do so in 49 states, excluding Washington. While they automatically don’t fall under any gambling laws, any other state or federal laws that govern any aspect that may be incidental will still need to be complied with.
So long as all legal obligations are met, players may play for free at sweepstakes casinos. On the other hand, prizes that they may win can still be redeemable for cash. These prizes can be won by entering into sweepstakes tournaments offered by the platform. Since not every sweepstakes casino may be able to operate in every state, trustworthy and responsible ones will usually post information about which states they may be played in.
Is it All Worth it?
So long as most US states have still not legalized online gambling, sweepstakes casinos are a great alternative. The fact that real money prizes can still be won on them basically vitiates the fact that real money online gambling isn’t allowed. However, even though, for now, it’s all become a necessary loophole, the legislative landscape will likely change drastically in the next few years.
This is because many US states are either still considering the option of legalizing online gambling, or have already begun working on enacting legislation to make it legal. Once more and more states begin legalizing online gambling, it’s hard to imagine that sweepstakes casinos will remain as popular.
Despite sweepstakes casinos having relative freedom to operate legally, it should also be noted that they will still be subject to any state or federal law that applies to any other part of their business. In that sense, any infractions around things like tax obligations, consumer protection laws, or other general regulations, can place the platform within the jurisdiction and purview of state AGs, and even result in the platform being forced to shut down for non-compliance.
Whatever the future may bring, for now, sweepstakes casinos are very popular and prevalent throughout the nation. As financially lucrative as online casinos are in many other parts of the world, the fact that US states have thus far taken a more circumspect stance against them isn’t a bad thing. How much that will change in the future remains to be seen.