Sweepstakes casinos and consumer protection laws
Jerard V. • Last updated on 20 November 2024
Sweepstakes casinos are becoming increasingly popular as time goes by, and it’s no wonder why. Seeing as traditional gambling is restricted and even illegal in some countries, playing sweepstake games online seems to be a reasonable alternative.
These platforms do not necessarily fall under the gambling category since players aren’t required to give money to participate, but they can still win valuable prizes.
The overall idea behind these casinos is to create a safer, more responsible, and ethical way of participating in casino games in countries and states with stricter gambling restrictions. That isn’t to say that there aren’t any rules and laws that such casinos must adhere to.
We’re going to take a look at the basic consumer protection laws, as well as the procedures and regulations these casinos must follow if they are to operate within a particular area.
Introduction to consumer protection laws in the context of sweepstakes casinos
These casinos must adhere to customer protection laws to retain their legitimacy and legal status. In the United States, this is regulated by the Federal Trade Commission (FTC). Simply put, the FTC ensures they operate legally, transparently, and fairly.
Because the laws and regulations vary from state to state, the state attorney general can also hold casinos accountable if they do not adhere to the state’s consumer protection laws. That can, in turn, drive away certain companies that do not wish to meet these standards.
For example, states like Michigan and Washington have imposed laws that are so rigorous that most sweepstakes casinos have ceased their operations there.
Overview of key consumer protection laws affecting sweepstakes casinos
These casinos must adhere to laws regarding transparency, fair play, and the prevention of underage gambling. That also includes avoiding false advertisements, deceptive trade practices, and any room for misunderstanding their terms and conditions.
These laws represent the first line of defense that protects you from illegitimate, fraudulent, and misleading companies.
If sweepstakes casinos do not follow consumer protection laws, they can face fines or ultimately cease to operate within a given state.
How sweepstakes casinos ensure compliance with consumer protection standards
But how do sweepstakes casinos actually ensure compliance with customer protection rights? How can you be confident that they are operating lawfully?
Firstly, to ensure that they’re being transparent, such casinos must emphasize that they offer an AMOE (alternative method of entry). That ensures you know you can participate in games without payment, instead of being manipulated to believe your only option is paying.
Furthermore, sweepstakes casinos must make their Terms and Conditions clear and readily available to prevent any confusion and misinformation. Additionally, they must outline the redemption procedure (collection of prizes), processing times, and additional fees on their website.
Since they are all about free play for a chance to win prizes, it is only fair that entries using a free method must be treated the same as entries of those who paid. If you opt for an AMOE, you should have the same opportunity and chance to participate in games and win prizes.
To prevent underage gambling, sweepstakes casinos require you to verify your identity and account into KYCs. They will ask you to provide a government-issued ID to confirm you are of age and other information such as proof of address and financial service information.
The role of technology in enforcing fair play and security
Implementing technology is a way of enforcing fair play and security in the gaming environment of sweepstakes casinos.
They use RNG (random number generator) algorithms to ensure that games aren’t ‘rigged’ and are genuinely games of chance. Before a casino employs these generators, independent agencies test them to ensure all players are on equal footing.
When it comes to security, sweepstakes casinos use encryption technologies. That prevents unauthorized access to the information you provide during the account verification process.
Legal challenges and future perspectives on regulation and compliance
Although the laws governing online gambling and the proper conduct of sweepstakes casinos are clear, some have had issues following them.
One example is the class action lawsuit against Coinbase in June 2021. Coinbase included an alternative method of entry in their sweepstakes; however, they purposefully made it difficult to find, letting players believe they had no way to participate for free. In addition, much of their marketing made it look like you could only participate by trading Dogecoins, a currency in which it deals.
It wasn’t ruled as promoting an illegal lottery since Coinbase did, in fact, offer an AMOE. Nevertheless, the court found that it was a breach of transparency and advertisement laws.
Another similar occurrence happened in September 2022, when Amy Jo Armstead filed a class action lawsuit for 11.75$ million against VGW Holdings, who owns Luckyland Slots and Chumba casino. Armstead claimed that the casinos draw players in by promising free play, only to lead them to purchase more gold coins to play.
Based on the current climate in the gaming industry, the number of sweepstakes casino regulations will not stop growing any time soon. As recent cases have shown, there are still those trying to work their way around the law, manipulating players to purchase coins.
As such, we’ll likely see stricter compliance with consumer protection laws since the lack thereof has already cost some of these casinos an arm and a leg.
Conclusion
If you are someone who wants to start playing sweepstakes games, we suggest you carefully choose your casino. Read the terms and conditions thoroughly and search for alternate entry methods to ensure you’re dealing with a reputable and reliable casino.
