New York Legislators Approve Anti-Sweepstakes Bill, Await Governor's Signature

Lawmakers in New York State have been unwavering in their intent to shut down sweepstakes social casinos. Anticipating this outcome, operators like VGW, among others, have chosen to either gradually close their operations or completely leave the Empire State in the coming weeks and months.

The latest development that challenges the sector is Senate Bill 5935, supported by gambling advocate Senator Joseph Addabbo, who has been ardently working to eliminate sweepstakes. SB 5935 has advanced this agenda by securing a unanimous 141-0 vote in the State Assembly and a 57-2 vote in the Senate. The next step is for Governor Kathy Hochul to sign the bill into law. The legislation aims to strengthen the role of the New York State Gaming Commission, transforming it into a key entity in the effort against the sector. The bill also extends the power of the Commission and the Attorney General to impose penalties. According to SB 5935, penalties will range from $10,000 to $100,000, and violators may lose existing licenses or face difficulties in obtaining future ones. New York has taken a strong stance against the sector, with State Attorney General Letitia James recently targeting sweepstakes platforms, issuing 26 cease-and-desist orders this month and accusing them of illegal operations. This action has received significant resistance from trade groups, who argue that sweepstakes models are grounded in legal precedent and are not inherently illegal. Given that companies like Microsoft, Coca-Cola, and Pepsi use them, the regulatory framework for sweepstakes-type rewards is well-established.

The Social and Promotion Games Association has issued a warning regarding the language used in the new bill, emphasizing its overly broad wording: Although advertised as a crackdown on 'social casinos,' the bill's language is far too expansive. It grants unchecked authority to the State Gaming Commission to determine which games are prohibited, without providing clear guidelines to differentiate between regulated gambling and promotional sweepstakes or loyalty programs. For instance, in Louisiana, a bill designed to further criminalize sweepstakes was vetoed by Governor Jeff Landry because its language was excessively broad and posed a risk of future misuse.