Maine lawmakers deliberated Wednesday afternoon over a proposed bill banning Sweeps Coin gameplay in their state. Legislative Document 2007 was discussed before the Joint Veterans and Legal Affairs Committee.
Representatives from the state’s Gambling Control Unit and DraftKings testified in favor of the ban, while VGW and the Social Gaming Leadership Alliance spoke in opposition.
State gambling regulator testifies in favor of ban
Milton Champion, Executive Director of the Gambling Control Unit with the Department of Public Safety, testified in favor of LD2007.
“With the passing of this bill, Maine will join New York, New Jersey, Connecticut, Nevada, Montana, and California, with more states to follow,” Champion said. “The bill impacts online games or contests that use a dual currency system of payment, and that simulates casino style gaming, including but not limited to slot machines, poker and other table games, lottery games, bingo, and even sports wagering.”
Dual currency system of payment refers to the practice of using more than one system of coins or tokens to facilitate gameplay and is further defined in the bill. The bill provides that a person that operates or promotes an online sweepstakes game is subject to a fine of not less than $10,000 and not more than $100,000.
The bill requires that all fines collected be distributed to the Gambling Addiction Prevention and Treatment Fund under the bill.
“If a person is found to operate or promote an online sweepstakes game, and that person holds a license with a gambling control unit or the gambling control board within the Department of Public Safety to operate a casino, fantasy, sports, or even charitable gaming activities, the licensing entity must be revoked,” Champion said. “A person that violates online sweepstakes games per prohibition is also ineligible to receive one of those licenses specified by the bill in the future.”
Champion said the biggest conversation is these sweepstakes are operating with no regulatory oversight and no problem gambling.
DraftKings supports bill, cites consumer protection concerns
Kevin Cochran, Senior Director of Legal and Government Affairs at DraftKings, also testified in support of LD2007.
“With the passage of LD1164 last year and earlier this month, Maine has taken a step forward in legalizing a framework for online casino gaming that prioritizes consumer protection, responsible gaming and regulatory oversight,” Cochran said. “Unregulated sweepstakes-style casino platforms operate outside of that framework, drawing players away from licensed operators and undermining the intent of the law.”
He said this legislation would help close that gap and ensure online casino gaming in Maine is conducted in a safe and regulated environment.
“We also support this legislation because it will help retain players in that regulated market that does offer those consumer protections, has some fair play standards, offers RG resources to those players who need them,” Cochran said. “We think that the rollout of Maine’s online sports wager market has demonstrated that online gaming can be done in a safe way for players across the state where they are protected, operators are accountable and the state maintains oversight control of the activity.”
VGW warns ban could stifle future gaming innovation
Lloyd Melnick, Chief Growth and Strategy Officer of VGW, the largest developer and operator of sweepstakes casinos in the world, testified against LD 2007.
“By banning these Social Plus games, Maine would be setting a precedent that any future interactive innovation interested in entering the state could be blocked,” Melnick said. “And that could even include things like daily fantasy or many of the opportunities like historical horse racing that I heard discussed earlier today.”
Instead, Melnick said Maine can build on its momentum as an enterprising and forward-thinking state, where innovators, entrepreneurs and industry disruptors battle it out in the market, so the residents of Maine have more entertainment options and it creates fiscal opportunities for the state.
It shouldn’t come down to who has the most influence, but who delivers the best games and player experiences to people who want to play, he said.
“Since 2012, VGW games have been enjoyed by millions of people across the U.S. including many in Maine and casino themed games are nothing new,” Melnick said. “For those who don’t want the stress of risking real money on a gambling website or a land-based casino, our games merely share mechanics with casino games without a player ever having to spend the dime. In fact, the majority of our players, most of whom are between 35 and 54 never spend the penny.”
Melnick said if you look at a land-based casino, a gambling company, and an online gaming company, none of them have customers who never spend a penny.
“The majority of our players never spend a penny,” he said. “They get the exact same experience.”
He likes to use the example of Publisher’s Careering House, now owned by ARB Interactive, which owns the popular sweeps casino Modo.us.
“Sometimes we run promotions,” Melnick said. “That’s the sweepstakes you hear about where you buy this currency, and you get a bonus. You’re entered in sweepstakes, which you can play with. Those sweepstakes can lead to monetary rewards. They can be gift cards, but they can be redeemed for cash. You’re not actually gambling. You’re not buying sweepstakes tickets. We give them to players as part of purchases, but you can also get them for free in a multitude of ways, including the Publisher’s Clearinghouse alternative means of entry. You send in a postcard, you get free sweepstakes, but they can be redeemed for cash.”
When asked, Melnick said most of the prizes are very small, but they do have big winners.
“We do like to give out big checks,” he said. “We’ve made multiple millionaires over the 12 years we’ve been in existence. Some have been in the several million.”
SGLA warns ban would push out legitimate operators, leave illegal ones
Sean Ostrow, Managing Director of the Social Gaming Leadership Alliance, said they are rising in opposition to LD2007, “which would ban and actually criminalize our entire industry, including law abiding businesses that have been operating in Maine since 2012.”
“We take the same concept of those free to play social games,” Ostrow said. “We do enhance it with the opportunity to win real prizes through widely established and well-known sweepstakes marketing arrangements. Currently those are legal under Maine laws that define game promotions.”
Ostrow said SGLA has established a regime of strong consumer protections. They are mandatory 21-plus — all members of the SGLA have agreed to that and currently abide by that. He said SGLA members have strong age and identity verification using state-of-the-art third-party vendors that do highly secure transactions used in banking and mortgages.
“We think if LD2007 passed, the outcome will be pretty predictable,” Ostrow said. “The law-abiding operators, including members of the SGLA, would exit the state, but it would be the illegal operators that stay. They can continue to prey on unsuspecting Maine consumers. Many of those are based in China that use exploitative marketing techniques. We believe there’s no place for that.”
