So … a lot happened this week with legislation in Tennessee that would have affected sweepstakes casinos.
First, House Bill 1885 was replaced by Senate Bill 2136, a duplicate of HB1885 that had already passed the Senate.
Then, an amendment that would have ordered a study analyzing what a regulated sweepstakes casino industry would look like in Tennessee was withdrawn. And, after that, a new amendment was approved in the House that removed any mention of sweeps, virtual currency, or anything related to the industry — instead focusing on modifications to the state’s code regarding gambling regulation and enforcement of gambling laws.
While that would seem to suggest that sweepstakes casinos have dodged a bullet in Tennessee, the matter remains of whether sweepstakes casinos fit the definition of gambling under existing statutes. The state’s chief law enforcement officer, Attorney General Jonathan Skrmetti, has already made his opinion on that matter clear.
However, the bill hasn’t cleared the Tennessee Legislature yet. On Thursday, the Senate rejected the amended House version. So SB2136 now heads to a conference committee with lawmakers from both chambers with the goal of agreeing on a final version of the bill to send to the governor.
SB2136 gets significant revision in House
On Tuesday, the House of Representatives took up HB1885. The body replaced that bill with SB2136, which the Senate approved 32-0 in March.
However, after rescinding the sweeps study amendment, the House then added an amendment to SB2136 that made major revisions to the measure. HA1152 removes all the text that explicitly referred to sweepstakes casinos.
The House then passed the amended version 67-20. As amended, the House-approved version of SB2136 focuses on the powers of the Attorney General, the authority of gaming regulators in the state, and adding gambling law violations to the list of violations of Tennessee’s consumer protection statute.
The Senate rejected the amended version, and thus, we’ve reached the conference committee stage.
While the removal of language targeting sweepstakes casinos could be seen as a victory for the companies that operate those platforms, the House’s action wasn’t as favorable as it could have been for them. As mentioned, an earlier amendment to HB1885 would have commissioned a study of the impact of legalizing and regulating sweepstakes casinos in Tennessee. However, that amendment did not make it onto the House-approved version of SB2136.
It’s still possible that the new authority SB2136 purports to grant to the Attorney General and gambling regulators in Tennessee might affect sweepstakes casinos. However, the use of those powers will rely on an appropriate reading of the potential statute.
SB2136 could expand law enforcement actions against sweepstakes casinos
Where the House- and Senate-approved versions of SB2136 mostly line up is in regard to the expansion of the abilities of the Tennessee Attorney General’s authority to investigate potential violations of gambling laws. The common language as it pertains to the Attorney General includes that the person in that office may:
- Require a person with information relevant to the subject matter of the investigation to file a statement or report in writing, under oath or otherwise, as to all the facts and circumstances concerning the alleged violation and to furnish and make available for examination all documentary material and information relevant to the subject matter of the investigation.
- Examine under oath a person with information relevant to the subject matter of the investigation.
- Examine or sample all merchandise deemed relevant to the subject matter of the investigation.
Additionally, the bill in both versions “provides that a person who has received notice of a request for information, or of an order described above, and with the intent to avoid, evade, or prevent compliance, in whole or in part, with a civil investigation or order, removes from any place, conceals, withholds, destroys, mutilates, falsifies, or by any other means alters documentary material in the possession, custody, or control of a person subject to such notice, is subject to a civil penalty of not more than $1,000 per document.”
Should that language become final, the applicability of these powers to sweepstakes casinos would hinge upon whether law enforcement considers them gambling platforms. The Senate-approved version of SB2136 provides for that definition, but the House-approved version removes that language.
Reconciliation of the versions might restore that text, along with other tenets of the Senate bill targeting dual-currency and online sweepstakes games explicitly. In practice, however, it may not matter much within the context of Tennessee.
Tennessee Attorney General has already taken aim at sweepstakes casinos
Skrmetti announced in December that he had sent cease-and-desist demands to the operators of almost 40 sweepstakes casino websites. In that announcement, Skrmetti characterized the websites as representing illegal gambling for people in the state.
Multiple recipients of those actions have already stopped doing business in Tennessee, making Skrmetti’s action sufficient to affect the desired change in those regards. The Tennessee Legislature may be on the verge of giving Skrmetti and those who will proceed him more motivation to repeat those measures in the future. Let’s see what comes from the conference committee.
