Bill to Ban Sweepstakes Gets Favorable Report from New York Assembly

A ban on sweepstakes casinos, New York Assembly bill A6745, has moved forward after a favorable report by the Codes committee on May 28. The legislation will now be referred to the Ways and Means committee.

Prohibition on sweepstakes casino mobile applications has been a hot national topic in recent months. In May, Montana became the first state to pass a law banning the platforms. Louisiana is rapidly advancing legislation which could accomplish the same result.

Sweepstakes casinos are online gaming platforms that allow consumers to play casino games such as slots, roulette, baccarat, and other games. Users are not required to fund an account with a credit card. Instead they play the casino games with digital tokens, coins, or other non-tender items. If they succeed at the casino play, the users can redeem their coins or tokens for gifts, prizes, trips, and even cash.

The bill would ban any gaming product that “utilizes a dual-currency system of payment allowing the player to exchange the currency for any cash price, cash award or cash equivalents.”

The Assembly bill grants authority to the New York State Gaming Commission to determine what “utilizes a dual-currency system,” and also permits that agency to enforce penalties to violators.

The troubling issue with sweepstakes casinos for regulators is the fact that little vetting takes place for customers, so there is a concern underage consumers could download the apps and play. In addition, the sweepstakes operators do not pay taxes on revenue generated from the activity. Lastly, the game play in sweepstakes apps is little more thana thinly veiled loophole of the gaming regulations. The platform operators argue that it's not gambling because users are not placing money at risk.

New York has legal casinos in select areas of the state, operated under the auspices of native tribal nations. The state has legal, regulated sports betting, including online wagering on sports. But, New York has not legalized online casinos. Fewer than a dozen states have enacted laws permitting online casinos. One of those is neighboring New Jersey.

Sweepstakes Casino Ban Appears to Have Wide Support

Earlier in the current legislative session, the New York State Senate considered Senate bill S5935, which also bans sweepstakes casinos. That bill received a 6-0 unanimous approval vote from the Racing, Gaming, and Wagering Committee in March. But S5935 has yet to come to a hearing or vote in the Senate.

Several members of the Senate and Assembly have expressed support for a prohibition on sweepstakes casinos. Some lawmakers see the apps as a clear attempt to institute iGaming in New York without regulation.

Sen. Joseph Addabbo, a longtime advocate for legal, regulated and safe gambling in New York, introduced S5935, and has indicated his support for legislation to eradicate sweepstakes casinos from his state.

Any ban on sweepstakes would need to be passed in both houses. It is unclear if the New York State Assembly plans to push A6745 to a full Assembly floor vote before the 2025 session ends later this month.