New York Bill Banning Sweeps Casinos Advances

Another day, another anti-sweeps casino bill passing in a statehouse drawing attention to the problem with sweepstake casinos. Today was New York’s turn, as the Racing, Gaming, and Wagering Committee unanimously passed Senator Joseph Addabbo’s legislation to prohibit sweepstakes casinos in the Empire State.

SB 5935 will now go to the full Senate. Though there is no guarantee that it will even get a vote, it will at least be put on the calendar for discussion. Much of the bill follows Maryland bill SB0860, which defines sweeps casino gaming as any promotion, contest, or game that simulates casino or sports betting-type gaming. And that uses a dual currency system, which allows the player to exchange one currency for a chance to play or for real cash, prizes, or gifts.

Also, just as the Maryland bill that passed through the Maryland Senate on its way to the House this week, this bill takes careful aim at those that provide ancillary services like geolocation services, payment providers, and even affiliate marketers.

It lays out the ability for New York State to refrain from issuing licenses to those that have previously provided such services and to take licenses away from those currently allowed to operate in the state who are found to be providing services to sweep casinos deemed to be operating illegally.

While many sweep operators have disregarded efforts to regulate their business model, it will be difficult to find providers willing to risk their current license or their chances of being licensed in the future in one of the country's most populous states.

Without payment providers, affiliate marketers, and potentially many social media sites, and even Google's refusal to allow them to advertise, many Sweeps operators might find themselves starved out and looking for states with less robust protections.

Senator Addabbo referenced sweeps operator High5Gaming’s current difficulties in Connecticut, where they were recently charged with over 1,000 misdemeanors for allowing residents in that state to gamble while High 5 lacked a license to enable them to do so.

Connecticut’s Department of Consumer Protection also alleged more than 100 instances where problem gamblers who had sought refuge under the state’s self-exclusion law to protect themselves from their addictions were allowed to register with High 5 and lose more than $300,000 combined.

Connecticut also chose to hit High 5 with a ban on licensing proprietary slot machine content, which they leased to legal providers DraftKings and FanDual. The loss of this license may cause the company to lose its ability to sell or lease its slot games in other states, which had provided them with significant legal revenue.

As the senator pointed out, this type of unlicensed and unregulated content can make it harder for licensed entities to operate. It remains to be seen if the full New York Senate will decide to take action on the bill, especially ahead of a much-anticipated awarding of downstate land-based licenses in New York City, hopefully sometime later this year.

Two things are certain: many of those companies vying to spend billions on a land-based casino license are going to want some guarantees on online competition, especially the unlicensed kind. And that the situation in Connecticut has dramatically weakened the hand of sweeps operators, who had best find a way to quickly and dramatically embrace some responsible gaming practices and principles.