Many operators of websites offering sweepstakes-based, casino-style games have already stopped serving customers in New Jersey, but that could become more commonplace if recent activity in the state legislature continues. The New Jersey Assembly’s Appropriations Committee recommended a bill that imposes new restrictions on sweepstakes in the state for passage on Thursday.
If the bill becomes law, New Jersey would be the first US state with a legal and robust real-money online casino industry to enact such a ban. Given New Jersey’s place of prominence in the US gambling space, it might set a strong precedent for other states to follow.
New Jersey Assembly committee advances A 5447
On June 19, the New Jersey Assembly Appropriations Committee voted 11-0 to report out favorably A 5447 with an amendment from the committee. The amendment alters definitions in the bill to ensure that A 5447’s provisions target online sweepstakes games that mimic or simulate casino-style games or sports wagering.
A 5447 prohibits sweepstakes, defining sweepstakes as “a promotional, advertising, or marketing event, contest, or game, whether played online or in-person, in which something of value, such as a prize or prize equivalent, is awarded, either directly or indirectly through means such as a dual currency system of payment that allows a participant to exchange the currency for a prize or prize equivalent.”
The bill also gives the New Jersey Division of Gaming Enforcement new enforcement powers, including levying penalties of $100,000 or more on people found violating this presumed statute. A 5447 includes exemptions to the sweepstakes prohibition for promotions that are “ancillary to the purchase of food, non-alcoholic beverages, or other merchandise not exceeding $20 in value…provided, however, that such other items of merchandise will not include coins, tokens, or online credits that have no value other than permitting sweepstakes entry or that are able to be exchanged for money or merchandise from the sweepstakes operator or an affiliated company.”
A 5447 has a Senate companion, S 4282, which has not seen any activity since May 29. For many operators of sweepstakes casinos, New Jersey enacting either bill might be a moot point to a great extent.
Preemptive moves by sweepstakes casino operators
Several prominent operators of sweepstake casino sites have already stopped accepting paid entries from people in New Jersey. Examples include High5 Casino and Stake.us.
In making its move to exit New Jersey along with other states that have legalized real money online casinos, companies like High5 and Stake have prioritized regulatory compliance over revenue. For them, New Jersey making their business expressly illegal isn’t a main point of contention.
Rather, the bigger concern for these companies is that New Jersey will continue to wield influence over other states in the gaming space.
New Jersey’s prominence in gambling law
New Jersey has been a leader in regulating gambling for decades. The legacy goes back to the establishment of brick-and-mortar casinos in Atlantic City, through to legalizing iGaming in 2013, and then being the state that led the way in overturning PASPA to regulate sports wagering.
Other states have beaten New Jersey to the punch on banning sweepstakes casino gaming. So far, those states include Connecticut, Montana, and Nevada.
A bill is also only a governor’s signature away from becoming law in neighboring New York. While New York has a greater population, New Jersey is a more visible leader in gaming policy.
That’s why the withdrawal of a New Jersey bill that would have regulated sweepstakes casinos and the advancement of A 5447 is potentially concerning for sweepstakes casino operators. In the US gambling industry, where New Jersey goes, much of the rest of the country follows.
