Will New York Gov. Kathy Hochul Approve Anti-Sweepstakes Casino Bill?

New York Gov. Kathy Hochul (D) has the opportunity to ban sweepstakes casinos across the state.

The same week that the Gaming Facility Location Board chose to approve three land-based casino projects, a major victory for Hochul’s office, a bill to ban online sweepstakes casinos reached her desk.

If Hochul signs the bill, New York will band with California, Connecticut, Montana and New Jersey, all of which also approved similar prohibitions.

Is a ban coming?

Senate Bill 5935 was sent to Hochul’s desk on Monday. 

Fresh off of the victory of having three downstate retail facilities approved for operation, provided the New York State Gaming Commission doesn’t veto the vote, Hochul has until Dec. 31 to sign, veto, or take no action on the bill. Failing to take action would result in it defaulting into law.

The bill passed votes in both chambers earlier in the summer thanks to Sen. Joseph Addabbo Jr. (D), the chair of the Racing, Wagering, and Gaming Committee, and a recurring figure in legislative matters involving gambling. 

Terminology used in the bill would ban dual-currency-model casinos, which allow but do not require customers to purchase virtual coins that can be used to play games and win prizes. The winnings from these games can then be redeemed for more currency and various items, including gift cards.

The bill would hold sweepstakes casinos  operators, as well as financial platforms, payment processors, suppliers, and marketing affiliates liable for any violations of the ban.

Could sweepstakes casinos become regulated?

Sweepstakes casinos have proven to be a thorn in the sides of many state regulators. That’s why Hochul is faced with an important decision regarding the future of these platforms. 

While traditional online casinos need to receive the necessary licensing before they can begin operating within state lines, sweepstakes casinos operate within a legal gray area. The Social Gaming Leadership Alliance (SGLA), which champions social gaming, argues that restricting sweepstakes casinos takes away a perfectly legal form of gambling.

In an effort to restore the reputation of sweepstakes casinos, the SGLA recently rebranded its games as “Social Plus,” distinguishing them from other games by highlighting their focus on responsible gaming.

With that recent distinction, New York could be a trailblazer for sweepstakes casinos. By regulating them they would avoid the same conundrums faced by other state officials, many of whom have sent cease-and-desist orders to sweepstakes operators. 

The New York market is extremely lucrative across all sectors of the gaming industry. Research done by gaming research firm Eilers & Krejcik Gaming found that New York generated approximately $762 million in sweepstakes revenue last year, leading to more than $250 million in net revenue. 

They also noted that New York could gain roughly $80 million in annual funding if it regulates sweepstakes casinos instead of completely banning them.

That, coupled with the imminent approval of the retail facilities, would give New York one of the most robust gaming markets in the country.