On Wednesday, Minnesota lawmakers voted unanimously to move House File 4410 to the Public Safety Committee.
Introduced in mid-March, the bill specifically targets the dual-currency gaming mode used by sweepstakes casinos. This model allows players to use virtual coins (Sweeps Coins) that can later be redeemed for cash prizes — a practice the state argues is unlicensed gambling.
“House File 4410 would prohibit a person in Minnesota or a company to operate or conduct or promote online sweepstakes in Minnesota,” said Alexandra Haigler, legislative analyst for the Minnesota House of Representatives. “And the prohibition extends to entities that assist in that operation, such as platform providers, payment processors and financial institutions. The bill also imposes the same penalty violations for violation of existing prize law and gives the Commissioner of Public Safety and the Attorney General authority to deny anyone from commencing the operations or continuing if they’re already doing so.”
Minnesota Indian Gaming Association testifies in favor
Andy Plato, Executive Director of the Minnesota Indian Gaming Association, testified on behalf of their nine tribal nation members in strong support for HF4410.
“Sweeps casinos are unregulated and illegal gaming platforms that advertise here every day,” Plato said. “I just saw one in the morning edition of the Pioneer Press. Internet gambling is illegal under Minnesota law and sweepstakes products, which masquerade as free to play, are taking deposits and reporting billions in earnings annually.
“These casinos, such as Chumba and WOW Vegas, offer every game imagined and hide behind a deceptive dual-currency model designed to skirt existing gaming laws; 25-plus states have seen through this deception and responded with bans restrictions or have legislation pending. House File 4410 follows that lead to assert that internet gambling is illegal in Minnesota until the legislature says otherwise.”
Plato said they also appreciate that this bill does not interfere with current legal promotional tools.
“Any normal sweepstakes or social game that doesn’t use dual currency and casino games should continue to be allowed,” he said. “And House File 4410 recognizes that. Thanks to authors, chairs and committee, this bill protects Minnesota consumers and rightfully clarifies that these real money casinos are illegal.”
ARB Interactive CEO is a Minnesota native
Patrick Fechtmeyer, founder and CEO of ARB Interactive, the company behind the sweepstakes casino Modo.us and Publisher’s Clearing House, testified against it.
“I would like to address one mischaracterization of social gaming,” Fechtmeyer said. “Off the bat, we’re not offshore. I sit before you as a Minnesotan. I grew up here. I went to high school in Minneapolis, and I attended the University of Minnesota’s Carlson School of Management. This state shaped how I think about business responsibility and community. It’s why I care deeply about getting this right.”
ARB employs over 200 people in the United States in technology jobs.
“We serve millions of players who are looking for safe, transparent, and entertaining digital experiences,” Fechtmeyer said. “Participation in our sweepstakes is always free with clear alternative methods of entry. And compliance with state law is central to how we operate. I grew up in the first generation native to the Internet, and one lesson has become very clear. When you try to ban digital behavior that people want, it doesn’t disappear.”
Fechtmeyer said it moves to places that are harder to regulate and less safe for consumers.
“If this bill is passed, it will not eliminate this activity,” Fechtmeyer said. “Instead, it will push Minnesotans to the 1,100 offshore operators who hide behind shell companies and don’t comply with consumer protections or sweepstakes laws while companies like ours — companies that have roots in Minnesota— invest heavily in age verification, geolocation, compliance and consumer protections, and believe in proactive engagements with stakeholders.”
Fechtmeyer said HF4410 would close the door on the opportunity to create a modern, enforceable framework that could both protect consumers and generate significant tax revenue.
“In the end, consumers are unprotected and the state left without tax revenue, the only people who will win is offshore operators,” he said. “Minnesota has a real opportunity here, not just to react, but to lead. We can modernize sweepstakes laws in a way that creates clarity, strengthens consumer protections, establishes enforceable standards, and ensures the state benefits from economic activity that is already happening.”
Fechtmeyer: ‘Defer this bill until next session’
Fechtmeyer said they only became aware of this bill recently and it has serious flaws which could ban many forms of digital sweepstakes.
“Given the complexity of this issue and the long-term implications, I respectfully ask the committee to defer this bill until next session,” he said. “That would give all the stakeholders the time to come together and work towards a thoughtful, balanced solution that reflects where technology is today and where it is heading over the next 20 years.”
Lexi Morgan appeared on behalf of the Social Gaming Leadership Alliance to oppose HF4410.
“SGLA members operate under strict internal advertising standards, along with robust consumer protections, including 21-plus age requirements, identity verification, geolocation and responsible social gameplay tools,” Morgan said. “If this bill is passed, it will push our association’s longstanding responsible social plus companies out of the state, only to be replaced by legal operators with exploitative business practices.
“Social plus games are regulated. SGLA members comply with Minnesota sweepstakes laws and every facet of Minnesota consumer protection law. Additionally, our industry is regulated at the federal level by the FTC, FCC, U.S. Postal Service and DOJ Consumer Protection Division.”
Morgan said the SGLA believes that Minnesota sweepstakes laws should be updated for the digital age.
“We want to engage with the state and a regulatory and taxing framework, which could generate significant revenue for the state,” Morgan said. “Social plus games do not compete against casinos and charitable organizations. The way people participate in these games is entirely different than real money gambling. No money or consideration is ever required for a player to enter the sweepstakes. More than half of the participants never spend any money to play these games.
“Unfortunately, there’s not enough time for a nuanced discussion to address all of these misconceptions, which is why we are asking this committee to give this issue further opportunity for study before an acting a counterproductive ban. We want to work with members of this committee in the coming months to create legislation that will protect Minnesota consumers and generate substantial tax revenue.”
Bill sponsor: Let’s target sites ‘not operating legally’
Rep. Gregory Davids, Chair of the committee, acknowledged that his bill “is somewhat aggressive.”
“It would put a lot of these folks out of business,” he said. “What I want to be able to determine is who’s operating legally, who is not operating legally, and let’s go after the ones that are not operating legally. I think on a lot of the sweepstake stuff — we’ve been doing it for years. That being said, members, I’d appreciate your support to get this to Public Safety to continue working on this.”
