New Jersey Prohibits Sweepstakes Casinos in Latest Regulatory Move

Introduction to New Legislation

New Jersey has recently enacted a law banning sweepstakes casinos, joining a growing number of U.S. states that have taken similar measures against these types of gambling platforms.

Details on the Wagering Ban and Enforcement

Last week, Governor Phil Murphy signed bill A5447 into law despite resistance from various industry groups advocating for sweepstakes casinos, which often operate using two types of tokens: one with no cash value and another redeemable for cash prizes. This legislation aims to close loopholes that allowed operators to run online casino-style games despite real-money online gambling still being prohibited in the state.

The bill, which had been awaiting the governor’s approval since the state Legislature passed it on June 30, establishes a clear ban on the sweepstakes casino model and outlines penalties for non-compliant operators. Additionally, it empowers the Division of Consumer Affairs and the Division of Gaming Enforcement to take strict regulatory action against these platforms.

Clarification on Legal Ambiguity

While fully regulated online casinos are legal in only a handful of states, sweepstakes-based gaming services have proliferated in many others, often operating in legal gray areas. Advocates argue that sweepstakes are a long-standing practice, similar to promotional contests like McDonald’s Monopoly game or Publishers Clearing House sweepstakes, which offer prizes without requiring payment for participation. They emphasize that free play options are always available, meaning players are not obligated to pay.

Varied Approaches Across States

New Jersey becomes the sixth state this year to regulate or ban sweepstakes casinos, following Connecticut, Montana, Nevada, New York, and Louisiana. However, each state has taken a distinct path; for example, New York’s bill awaits the governor’s signature, while Louisiana’s governor chose to veto their bill, stating that existing regulatory frameworks were sufficient.

Nevertheless, both New York and Louisiana have issued cease-and-desist orders to major sweepstakes operators, including companies such as Virtual Gaming Worlds. The Louisiana Gaming Control Board Chair highlighted the state’s firm stance against illegal operators who risk player safety and threaten the integrity of the gaming industry, emphasizing ongoing commitment to enforcement.

Industry Reactions and Future Outlook

Before the New Jersey law was signed, former Congressman Jeff Duncan, now leading the Social Gaming Leadership Alliance, criticized the legislative response as misguided. Industry representatives argued that the law ignores critical data, stifles innovation, and damages New Jersey’s image as a hub for technological and entertainment advancement.

With California also considering similar bans, the debate around sweepstakes-style gambling remains active and contentious across multiple states.