Tennessee governor signs law banning sweepstakes casinos

Tennessee has become the latest state to move against the sweepstakes casino sector, after Gov. BillLee signed a draft proposal into law that effectively outlaws these operators in the state.

The crusade against sweepstakes casinos has faced less regulatory pushback compared to the prediction market sector, where the Commodity Futures Trading Commission (CFTC) has argued that states are trying to preempt federal regulation. This is hardly so in the case of Senate Bill 2136, which was signed into law on Friday, May 22, after landing on the governor’s desk a week or so earlier. The bill specifically seeks to ban the use of dual currency platforms that offer casino-style games, and which allow players to still redeem monetary and real-world awards in a roundabout way. The bill specifically amended the meaning of online sweepstakes games to be equated to gambling and will now allow state regulators and the attorney general to pursue legal action against offenders who continue to operate these platforms within Tennessee. Yet, Tennessee is not an outlier in its opposition to sweepstakes casinos, despite strong opposition from sector bodies that have time and again reiterated that the sector is established in legal and historic precedent. Industry stakeholders have said that they welcomed the desire of lawmakers to regulate the sector. In the meantime, many states have been acting against the sector on their own, also recognizing social and sweepstakes casinos as a roundabout way to skirt gambling regulations. Among the states to have also taken similar action in varying degrees are Indiana, Iowa, Maine, Montana, New Jersey, and New York, among others. Montana notably became the first state in the United States to also go out against the prediction market sector, leading to a lawsuit from the CFTC.