Sweepstakes Casinos: A Guide To The Growing Alternative To Online Gambling
Discover the world of sweepstakes casinos. Learn how they differ from traditional gambling, explore regulatory concerns, and understand the future of this growing industry.
If you’ve been following industry news lately, the term “sweepstakes” is one you’ve likely encountered at least in passing.
No, this isn’t the sweepstakes you may be familiar with—the practice of collecting a set amount from a group of people, with the winner taking the total sum. In offices and among friends, setting up sweepstakes around events like the Euros or Eurovision is a common annual tradition. However, in this context, the meaning of sweepstakes is a bit different.
What are sweepstakes?
Sweepstakes are an old concept in which players do not have to pay to enter, and any purchases made after entry do not increase the chances of winning, explained Manuel Stan, the newly appointed CEO of Catena Media. This is the key difference from traditional gambling.
Sweepstakes casinos offer an alternative way to play. Sweepstakes can be described as social games, providing a way to play without using real money. Players engage in games with the possibility of winning non-monetary prizes. These games are often played with some form of in-game currency, which can be obtained through various methods, including free promotional offers or as rewards for purchasing items such as virtual coins.
For affiliates, this presents a unique opportunity to drive traffic and engage audiences in a new vertical. For Catena, “online casino content is a key part of our business, and sweepstakes are the fastest-growing segment in the casino vertical. In regions where online casinos are not regulated, social sweepstakes casinos offer customers a viable alternative to traditional casino content.”
Sweepstakes also seem to have drawn some inspiration from social media and the idea of giveaways, which have proven to be effective tools for boosting engagement with online posts and accounts. Stan expressed a similar view, stating that social media played a key role in the proliferation of social sweepstakes casinos.
Sweepstakes in the US
“There are many different types of online casino games around the world,” said Stan. “Some operate under a sweepstakes model, meaning it’s free to play and test out the games while also being eligible for rewards of some kind.”
As Stan noted, sweepstakes offer the distinct advantage of being an alternative to online gaming in regions where the vertical remains unregulated. “In the US, social sweepstakes casinos have gained popularity, especially in states where they are the only legal alternative to online casinos. This is true for most states, as only six have legalized commercial online casino gaming so far.”
In Europe, and especially in the EU, where the regulatory process is more advanced, we don’t see the same level of interest in social sweepstakes casinos. This trend toward US interest is reflected in the increasing attention the vertical has received from regulators. In August, the American Gaming Association (AGA) released a memo expressing concerns about the sweepstakes model, particularly regarding its use by unlicensed online casinos and sportsbooks to circumvent laws and regulations.
The memo highlighted concerns about the lack of oversight, which could put players at risk, and the potential impact of sweepstakes on “the integrity and financial benefits of the legal gaming market through investment and tax contributions.” The AGA also warned that unregulated markets could lead to weak, responsible gaming protocols, unfair treatment of players, and increased opportunities for illegal activities.
Sweepstakes Regulations
As Stan mentioned, sweepstakes have sometimes been used to skirt regulations by offering gambling opportunities while technically not falling under specific legal definitions of gambling. This is the main concern for the AGA, as outlined in its memo.
Focusing on the US, Stan clarified that “US gambling regulations are applied at the state level,” which is why iGaming remains unregulated in many states. However, “the regulation of all online gambling verticals has been a top priority for most states in recent years.”
Although sports betting is now legal in more states than online casinos, the lack of online casino regulation has led customers to seek alternatives, such as social sweepstakes casinos. Stan noted that “the growth of the social sweepstakes casino sector will likely prompt state legislators to consider future online casino regulations.”
Regarding the AGA’s crackdown on sweepstakes, Stan emphasized that, while he is not a lawyer or regulator, “Sweepstakes follow a federal framework that regulates how prizes are awarded. States have the right to regulate the vertical further, as some have done. For example, Michigan has banned social sweepstakes casinos and Catena no longer operates there or partners with those who do.”
The AGA’s efforts are justified, as any unregulated market can expose players to harm. While companies like Catena follow the rules, others may not. Stan believes the AGA’s goal is twofold: to clarify the difference between sweepstakes and online casinos and to ensure that proper customer protection measures are in place. “We welcome this initiative and any progress toward regulating markets and verticals for the benefit of consumers.”
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The Future of Sweepstakes
With all of this in mind, what’s next for the sweepstakes vertical? For Catena, continued growth in the vertical is expected. Stan stated, “We believe our social sweepstakes casino sub-section will continue to grow organically as player interest in online casino content increases. Slow regulatory processes in many states are also fueling demand for social sweepstakes casinos.”
On a broader scale, Stan highlighted the importance of future regulation for the growth of the industry. He said, “We are in favour of regulation and are committed to working with trusted partners. We look forward to seeing progress in this area.”