Pennsylvania has become the latest state to begin ordering sweepstakes casinos to take their business elsewhere. The Pennsylvania Gaming Control Board (PGCB) revealed in a Gaming Oversight Committee hearing on Monday that it has issued 18 cease-and-desist letters to sweepstakes casinos operating in the state. Most of these are offshore companies, but some are based in the US, and some even conduct business in Pennsylvania.
However, none of them hold interactive gaming licenses from the PGCB. The so-called “sweeps” sites are play-money social casinos with a sweepstakes-based prize layer built on top. That makes them not a gambling product under federal law. However, an increasing number of state legislators and regulators are attempting to close what they see as a loophole.
The PGCB does not have the authority to take legal action or act against these companies as it could against real-money online casinos and sports betting operators. It can only issue cease-and-desist letters, but all 18 recipients have complied with the order so far.
However, the current popularity of the sweepstakes model means new brands are appearing all the time. That creates a “whack-a-mole” scenario, according to Chief Enforcement Counsel, Cyrus Pitre, who spoke at the hearing.
Chief Counsel, Steve Cook, also present during the hearing, noted that there is an issue with the gambling language in the law, which makes it easier for sweepstakes casinos to circumvent.
Gambling law definition needs to change
Cook said in the hearing that an easy fix to either ban or regulate sweepstakes casinos is to fix the definitions in the Gaming Act. He said:
“Unfortunately, in the area of interactive gaming, we are significantly hamstrung by the specific language of our enabling statute.
“Specifically Chapter 13B of the Gaming Act includes sections that appear to ban online gaming by unlicensed operators. These prohibitions ultimately come into conflict, however, with the definitions found in the Act.”
Cook brought up the Commonwealth Court‘s decision to rule the games as legal back in December 2023, which had an impact on the PGCB’s power in dealing with unlicensed and unlawful gambling. He added during the hearing:
“What the Commonwealth Court held, with very similar language in the skill games debate, was that this language wasn’t nonsensical, which I think it is.
“This language serves to prohibit and make clear that the Gaming Board only has control and authority over people licensed by it, not outside entities doing something, which is arguably illegal.”
Cook called for a legislative change to the language of the Gaming Act, which could give the PGCB more authority in weeding out unlicensed gambling.
Sweepstakes casinos are not subject to regulation
Just like skill games, sweepstakes platforms are unregulated and starting run rampant within the Keystone State. However, Cook believes the casinos are gambling. He added:
“In stark contrast to regulated and online casinos, sweepstakes platforms are not obligated to be tested for fairness to the patron nor are the sites obligated to provide responsible gaming services, age verification or other consumer protections.”
These operators are a threat to the legal industry in Pennsylvania, Pitre said:
“The Gaming Control Board, through its Bureau of Investigations and Office of Enforcement Council, is committed to maintaining the integrity of Pennsylvania’s legal gaming industry. … Sweepstakes casinos, despite their misleading presentation, is, in our assessment, illegal online gambling.”
Once detected, Pitre said the Enforcement Council conducts an investigation and then issues cease-and-desist letters to illegal operators.
Legislation is ready to act, help PGCB
Chairman of the Gaming Oversight Committee, Russ Diamond, said that he understands “the kind of pickle” the PGCB is in with sweepstakes casinos. He’s also ready to act as soon as possible.
However, in changing the language of the law, Diamond talked about the importance of predicting what can change down the line. Diamond said:
“We have to do it in a way that not just takes care of what’s going on today, but we have to try and anticipate what’s going to go on in a year, or two years, or five years, or 10 years [from now]. That’s very difficult for us to do because it’s hard to imagine what people are going to come up with.”
It appears as if the PGCB is going to get some help with some clearer regulations on unlawful gambling in the state.
