As dual-currency gaming has become the focus of lawmakers and regulators looking to crack down on sweepstakes casinos, many operators are experimenting with different models, including single-currency ecosystems, subscriptions, advance deposit wagering, and more.
A new pivot has also emerged in recent months: Tying purchases to actual physical products.
One example that’s rising in popularity is a site called AceBet.cc, which is marketing to players in states where traditional sweepstakes casinos have pulled out — including California and New York. Rather than selling digital Gold Coin packages that come with free Sweeps Coins, the model centers on physical card packs that can be shipped to customers. Then, like Gold Coin bundles, the purchase comes with bonus Sweeps Coins that can be used on casino-style games and potentially redeemed for cash.
How airtight is this alternative structure?
This structure depends on the perceived legitimacy of purchasing these physical products.
Let’s use California’s ban, Assembly Bill 831, as an example. It prohibits online sweepstakes casinos that use a dual-currency system and simulate gambling while awarding cash or cash equivalents. It also addresses consideration associated with a “related product, service, or activity” and its definition of indirect consideration includes redeemable promotional currency that comes when buying a related product or service.
Importantly: AB831 also says promotional games can remain legal when they are part of bona fide sales of products.
That language makes the physical-products strategy potentially more complicated than simply replacing digital Gold Coins with trading cards. The legal argument is that the customer is purchasing a legitimate physical product — the cards — and the Sweeps Coins are promotional value attached to that purchase. In theory, an operator can argue that the Sweeps Coins are an incidental part of a bona fide product sale.
But that distinction relies heavily on how the business actually operates. If the cards have little standalone value, and customers overwhelmingly buy them just because they want the accompanying Sweeps Coins, regulators could determine the physical product is simply a disguise for the same type of gaming the bans were designed to eliminate.
However, it may be hard for regulators to argue the cards have little standalone value to the customers purchasing them. Because how would they be able to measure that?
For operators, the key is proving that there is a legitimate product transaction independent of the Sweeps Coins.
Is this the same as loot boxes or mystery boxes?
This physical product pivot is different, however, from the gamified loot box-style platform created by sites like Modo.us in this new era for evolving sweeps gameplay models.
In April, Modo.us launched its Modo Box platform. A Modo Box is a mystery box that combines randomized rewards with an e-commerce-style purchase. Users buy Box Tickets, a dedicated currency for opening boxes. These tickets have no cash value and are separate from Modo’s casino-style games and Sweeps Coins.
Before opening a box, users can see the potential prizes, estimated values, and odds of receiving each item. Rewards can include physical products such as electronics, home goods, and branded merchandise, or digital products such as gift cards, downloadable content, or Gold Coins.
Each box guarantees a reward, with the outcome determined randomly. Modo also says the total value of a reward will meet or exceed the amount paid for the box, although that calculation can include the cost of the awarded Gold Coins.
After opening a box, prizes can be shipped for a fee. Depending on the item, users may also be able to sell it back to Modo for cash or convert it into Box Tickets.
The key difference between AceBet’s and Modo’s strategies is what the physical product is connected to. With AceBet, the physical product is connected to the free Sweeps Coins. Customers purchase physical card packs, and that comes with Sweeps Coins that can be used on the gaming platform.
Modo Boxes are solely randomized mystery boxes. Sweeps Coins are not part of the transaction or reward structure. Modo’s separate Sweeps Coin system is not directly connected to its physical-product mystery boxes.
Technically, this may pass the test
There frankly may be too much going on in other sectors of the gaming industry (ahem, prediction markets) for lawmakers and regulators to pay close enough attention to AceBet’s physical product model — or any of the emerging non-dual-currency models, for that matter — to actually dig in and investigate whether it technically abides by the new laws sweepstakes casinos must follow.
And, based on our analysis of the new bans outlawing dual-currency sweepstakes gaming, the physical product structure employed by AceBet and other operators for the most part does factually get around language in these laws — with more or less confidence in that statement, depending on the state — even if it’s common assumption that the structure is likely a workaround to allow players to play with Sweeps Coins in markets where bans are in place.
With all the moving parts in this prediction markets-crazed space right now, lawmakers and regulators may just be happy with their wins in banning dual-currency gameplay at sweeps casinos and prioritize other efforts in the near future.
