Minnesota intensifies scrutiny on sweepstakes, mulls ban

Minnesota is looking into potentially banning sweepstakes casinos, the vertical that has come under significant scrutiny in recent years and is increasingly turfed out by state lawmakers across the United States. Senate File 4474 is now making its way through to the Senate Committee of Commerce and Consumer Protection as of Tuesday, March 17. The proposal was filed on Monday by Senators JordanRasmusson, John Marty, Erin Maye Quade, Matt Klein, and Warren Limmer, who co-sponsored the bill.

The bill’s language specifically targets the dual currency system utilized by sweepstakes casinos, which allows players to exchange in-game currency for real-world rewards or cash, and Senate File 4474 will now attempt to suspend this activity, along with promotional activities within the state. Games with dual-currency systems allow players to buy or earn virtual currency that can be exchanged for cash or the chance to win cash. The regulators point out that this system is very similar to real money gambling, even though it attempts to evade current laws on gambling, the bill read. However, the bill is more comprehensive in its sweep, and who would be liable for sanctions should it be signed into law. The idea is to extend liability beyond the operators, involving advertisers as well as payment processors, and thus increase scrutiny on the sector while disincentivizing assistance. The Commissioner of Public Safety and the Attorney General will be tasked with enforcement and meting out penalties where applicable and appropriate. In the meantime, the Social Gaming Leadership Alliance (SGLA) has urged restraint and asked for lawmakers to think of how to regulate the vertical rather than prohibiting it entirely: Social Plus games are a popular form of entertainment enjoyed by hundreds of thousands of Minnesotans and have been operating lawfully in the state for over a decade. SF 4474/HF 4410 would ban these games entirely, punishing law-abiding businesses and the Minnesotans who responsibly enjoy them while doing nothing to address illegal offshore operators and shutting down the potential for the games to generate $20 million or more in state revenues. We urge Minnesota lawmakers to pursue smart regulation rather than prohibition. The SGLA has issued similar statements in other states across the country, but so far has limited success, as more states continue to turf out their sweepstakes industries and target the dual currency usage as a way to dodge gambling laws.