NJ AB5447 proposes to outlaw sweepstakes casinos
Operators could face fines up to $250k
It follows a pivot to proposed taxation and regulation in January 2025
New Jersey is aiming to implement a complete ban on sweepstakes casinos and “sweepstakes-style gambling” with the Assembly Bill 5447. The bill has already passed through the Assembly Committee and has reached the Assembly Consumer Affairs Committee.
It follows a sharp change in direction from Assemblyman Clinton Calabrese, who originally proposed to regulate sweepstakes casinos when he put forward AB 5196 back in January of this year. If the bill passes, sweepstakes casinos would be breaking state law and could face a $100,000 fine for their first offence.
Let’s begin with some of the key facts about this bill and the sweepstakes casino ban that it proposes:
The Garden State’s move to ban sweepstakes casinos outright was dealt another win last Thursday, as AB 5447 passed the Assembly Committee to progress to the next stage (Assembly Consumer Affairs Committee).
If the legislation passes, sweeps casinos would be rendered completely illegal within New Jersey borders, meaning that operating sites like Stake.us sweepstakes games would be a crime.
According to the details of the proposed bill, it is the operators, rather than the players, who could face legal sanctions. Sweepstakes casino apps and websites that continue to accept New Jersey players if and when the law comes into practice could face a fine of $100,000 for their first offence. Those who continue could face a second penalty of up to $250,000.
According to AB 5447, sweepstakes are in-person and online promotional, marketing, or advertising events/contests where prizes can potentially be won and rewarded either directly or indirectly.
Currently, sweepstakes casinos aren’t regulated or banned in most US states because they don’t offer any direct online gambling.
How sweepstakes casinos work is that they offer players the chance to play casino-style games using a dual virtual currency system.
Here’s how it works on most sites:
AB 5447 specifically seeks to outlaw contests where “something of value, such as a prize or prize equivalent, is awarded, either directly or indirectly through means such as a dual currency system of payment that allows a participant to exchange the currency for a prize or prize equivalent.”
This wording is specifically aimed at the sweepstakes online casino model, where players can commonly obtain their entries (Sweeps Coins) by getting them as a free bonus for purchasing Gold Coins (GC).
If Bill 5447 is passed, all online sweepstakes will be banned in the Garden State. The only exceptions will be in-person sweepstakes competitions that are tethered to non-alcoholic beverage and food purchases of $20 or less.
New Jersey was the first US state to legalize online sports wagering and casino gambling, and is still considered something of a trailblazer. Sweepstakes casinos and social sport betting sites are seen by many as an unregulated and untaxed threat to the state’s thriving and legal online gambling industry.
The proposed ban on sweepstakes casinos is a complete pivot from Assemblyman Clinton Calabrese’s original approach. In January, he put forward Bill 5196, which proposed to regulate and tax sweepstakes casinos.
However, that original bill went nowhere, leaving Calabrese with two choices: keep the status quo (legal, but untaxed and unregulated) or propose an outright ban. As we have seen, he chose the latter.
The bill faces strong opposition from the Social and Promotional Games Association (SPGA), an organization that aims to protect players, advocates for clear rules, and aims to help responsible innovation. A spokesperson has called NJ AB 5447 a “shortsighted” and “reckless attempt to ban sweepstakes”.
New Jersey isn’t the only US that is moving to outlaw sweepstakes casinos. Legislators in the following locations also have possible bans in the works:
| State | Bill(s) that propose to ban sweepstakes |
|---|---|
| Connecticut | SB 1235 |
| Florida | SB 1404 and HB 953 |
| Maryland | SB 860 |
| Mississippi | SB 2510 |
| New York | S 5935 and AB 6745 |
| Nevada | SB 256 |
While nothing is certain, all signs point towards the outright ban coming into place sometime in 2025. There was optimism about regulation when the original bill (AB b196) was proposed, due to NJ’s history as a trailblazing state when it comes to online gambling.
However, that bill was thrown in the trash can pretty quickly, and it’s doubtful lawmakers sidelined it with a view to maintaining the unregulated and untaxed status quo. Given the direction several other states are going, including two neighbouring states to NJ (NY and CT), it’s a case of when, not if, the ban comes into play.
