As his bill sits on Gov. Kathy Hochul’s desk awaiting her signature, even New York State Sen. Joseph Addabbo believes there’s a better approach to sweepstakes casinos than outright bans.
When and if Hochul puts pen to paper to turn S5935A into law, New York would become the fourth state, joining Montana, Connecticut, and New Jersey, to issue such a ban in 2025. California, where lawmakers are considering AB831, could be next.
Operating without licenses, sweeps casinos are circumventing state regulation and taxation. Legislators are concerned that these operators, in addition to not paying taxes, are putting their constituents at risk by offering gambling in an unregulated environment.
But by regulating instead of banning, states could tap into hundreds of millions of dollars in tax revenue and create a structure that helps protect players and prevent crime.
“It’s not about banning, it’s about regulating,” Sen. Addabbo told Sweepsy. “When you regulate the business in New York, we can talk about billions in revenue and job creation, but you [also] make a product much safer.”
Princeton Public Affairs Group partner Bill Pascrell III, an influential gambling industry attorney, lobbyist and advisor, agrees there’s a more collaborative, mutually beneficial path forward. Operators, of course, must be onboard.
“I don’t think the bans are right,” Pascrell said. “I think the best way [for operators to] fight them is to say, ‘We’re going to be front of foot, we’re willing to be licensed and regulated, we need an opportunity to be licensed in your state.”
Ban may be ‘first step’ — but tough to reverse
The bill in New York to ban sweeps is just the “first step” in creating a regulatory framework, according to Addabbo.
The Senator has been pushing for the legalization of online casinos in the state for the past three years, recognizing their potential to help close a massive budget gap. With the state already facing a $3 billion deficit next year, Gov. Hochul has warned of “cuts of about $13 billion a year between New York state and our overall health care system”, thanks to federal healthcare cuts.
“If we could regulate the online casino platform and make it legal in New York, not only do we get sustainable significant revenue, we get to protect New Yorkers in a far, far better way,” Addabbo stressed. “That’s going to be my mission come next session.”
Pascrell, though, cautions that once implemented, bans are tricky to reverse.
“It’s very hard to overturn a ban,” Pascrell explained. “It really takes a lot of effort to turn that around, and [operators] better get ahead of themselves and get over this position of not wanting to be regulated, because before you know it, there are going to be more and more states doing it.”
Are sweepstakes operators willing partners?
Operators have recently expressed a willingness to work with states, a welcome development to Pascrell, who has so far declined to take on any sweepstakes casinos as clients because of their resistance to regulation.
“I was introduced to VGW back in January, when bills started matriculating across several states,” Pascrell recalled. “They were going to hire me, but I had one condition: You have to want to be regulated, licensed, and taxed.
“Many of the powerful vertical sweepstakes companies are great brands, but they’re in the gray market. I think they need to pivot away from opposing bans, which are starting to accelerate, and they need to pivot toward regulation. That’s the better way to sustain the industry.”
At a California Senate Appropriations Committee hearing on AB831 last week, the Social Gaming Leadership Alliance’s Shane Levine stated, “Instead of a prohibition of online sweepstakes, we should instead regulate and tax it.” VGW is part of the SGLA and is currently advocating for sweeps regulation.
And in a statement emailed to Sweepsy, the trade group’s executive director Jeff Duncan added, “SGLA’s partners are ready and open to sensible regulation and taxation frameworks that can benefit hard-working constituents in the states where they operate and ensure millions of Americans have the freedom to enjoy the games they love in a safe environment.”
The SGLA cites Eilers & Krejcik’s estimate that online social casinos with sweepstakes will generate $14.31 billion in sales in 2025.
Who gets the licenses?
Resistance to regulation stems partly from wariness that while there are 150-plus sweeps sites offering casino games, there would be only so many licenses to go around.
Once iGaming is legalized, Addabbo says, the number of skins is negotiable, but sweeps entities would be allowed to operate in New York.
“That’s the opportunity I want to create,” the Senator said.
Added Pascrell: “There’s always been opportunity for competition and more verticals. If your position is, ‘I don’t want to be licensed because I don’t know if I’ll get one,’ well, if you’re suitable, you can get licensed if you don’t have a dodgy past.”
Eyes on California
As AB831 winds its way through the state’s legislature, the industry’s focus is on California.
“The most important state right now is California. I don’t think there’s an easy answer or a cookie-cutter approach to that,” Pascrell remarked.
Pascrell believes there’s a better chance for the bill to pass than not pass, but that with the right approach, sweepstakes operators can find a critical ally.
“Governor Newsom is a very smart, adept, nimble guy, and I think he appreciates the potential if this is regulated,” Pascrell said when we spoke last week.
“As of today, I’d say it’s 60/40 proposition to pass. If sweepstakes companies get front of foot and start to advocate better with real good boots-on-the-ground lobbying – educate before your advocate – they can turn that around.”
