• Lawmakers in New York have unanimously voted to outlaw sweepstakes and empower local regulators
• The bill now awaits the governor’s signature in the latest pushback against the sector
• A similar bill was struck down in Louisiana for fear of granting overreaching and ill-defined powers to regulators

Lawmakers in New York State have been inexorable in their determination to flip the kill switch on sweepstakes social casinos. In anticipation of this decision, operator VGW, among others, decided to phase out their operations, or outright walk out on the Empire State over the next weeks and months.

New sweepstakes-wrecking bill emerges victorious in NY legislature

Now, the latest decision that puts the sector on the back foot is Senate Bill 5935, backed by gambling advocate Senator Joseph Addabbo, who has been pushing hard for sweepstakes to go. SB 5935 has succeeded in achieving just that with the State Assembly passing a 141-0 vote in favor of the bill, along with a 57-2 vote in the Senate.

What this means is that all that is left is for Gov. Kathy Hochul to put her signature on the draft bill for it to become law. The legislation wants to empower the existing gambling regulator, New York State Gaming Commission, and turn it into the spearhead against the sector, with the regulator, as well as the Attorney General, empowered a step further to enforce penalties against the sector.

The size of the penalties as per SB 5935 will vary between $10,000 and $100,000, according to the bill predicts, and any offenders will also run the risk of losing existing licenses or possibly forfeiting the opportunity to obtain future ones.

New York has been offensive against the sector. State Attorney General Letitia James has already targeted sweepstakes platforms, sending 26 cease-and-desist letters earlier this month, and accusing the platforms of operating illegally.

This has elicited strong pushback from trade groups, which clapped back that sweepstakes models were established in legal precedent and not illegal as such. Since Microsoft, Coca-Cola, and Pepsi offer them, the regulatory framework for sweepstakes-type rewards is well-established.

Observers and even governors caution restraint

The Social and Promotion Games Association has cautioned about the issues with the new bill’s language, and specifically, its broad choice of wording:

"While positioned as a crackdown on "social casinos," the bill’s language is far broader. It delegates unchecked power to the State Gaming Commission to define prohibited games, with no statutory clarity to distinguish regulated gambling from promotional sweepstakes or loyalty programs."

In Louisiana, for example, a bill that would have further criminalized sweepstakes was struck down by Gov. Jeff Landry precisely because the language was too broad, and because it ran the risk of being misused in the future.

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