Louisiana AG Declares Online Sweepstakes Casinos Illegal, Begins Enforcement
Louisiana Attorney General (AG) Liz Murrill has officially opined that dual-currency Internet sweepstakes casinos are illegal under state law. In her July 2 legal opinion, Murrill concluded that sites offering slot, blackjack, and poker games via "Gold Coins" and "Sweep Coins" constitute illegal gambling as defined by state law.
The opinion came at the behest of Sen. Rick Edmonds after Senate Bill 181, which would have specifically prohibited sweepstakes casinos, was vetoed. The bill failed to pass after Gov. Jeff Landry said the activity was already illegal and a new bill wasn't necessary.
Violators could now face criminal prosecution with up to five years' imprisonment, be fined up to $20,000, and be charged with potential civil penalties under consumer fraud statutes.
Louisiana State Police and the Louisiana Gaming Control Board have also begun issuing cease-and-desist letters, conducting criminal investigations, and initiating asset seizures. In more than 40 cases, Louisiana has already taken action against unlicensed operations.
New Jersey legislature passes sweepstakes casino ban
Just days before Murrill's letter, New Jersey legislators moved against the state's sweepstakes casino operators with the passage of Assembly Bill 5447. The bill, which passed 34-5 in the Senate following its 69-10 approval in the Assembly, targets the "sweepstakes model of gaming" and now rests on Gov. Phil Murphy's signature.
If signed into law, New Jersey would become the sixth state to prohibit sweepstakes casinos.
The law not only forbids the underlying business model utilized by these sites but also charges the Division of Consumer Affairs and the Division of Law and Public Safety with enforcing it. These violations can result in penalties and other regulatory actions.
Despite strong legislative backing, the Social Gaming Leadership Alliance has opposed the legislation. Executive Director Jeff Duncan urged Governor Murphy to veto it, as it would impose "sweeping and vague" rules that would inadvertently affect legal promotional mechanisms used by businesses around the state.
The group argues the bill obscures the difference between illegal gambling and legitimate online marketing tactics, creating a regulatory dilemma for sites that are in gray areas of the law.
New York cracks down
New York has also targeted sweepstakes casinos in June. AG Letitia James and the New York State Gaming Commission collaborated and sent 26 operators cease-and-desist letters for allegedly providing casino-type gaming and sports betting to state citizens without authorization.
Even though the sites repeatedly claim that buying virtual currency is never a requirement to play, the state regulators declared the activity a blatant violation of gambling statutes. New York prohibits real money online casino gambling.
The AG and the Gaming Commission warned jointly that, in spite of apparent variations, the underlying operation of these sites is illegal gambling.
