Regulatory Changes: The US Sweepstakes Market Struggles

During the pandemic, the iGaming industry witnessed the surge of a new type of gambling model – the Sweepstakes. It operated solely on a “no purchase necessary” principle, which seemed like a perfect alternative for the traditional real-money gambling. After keeping the status quo for quite some time, only recently regulatory discussions have started. Now, the US sweepstakes market struggles as the American Gaming Association considers purchase of credits/coins illegal.

So, what’s the future of this gaming model? Let’s find out in our detailed guide.

The Paranormal Shift In Regulatory Compliance

Physical and online gambling operators have always been guided by certain regulatory laws both on the federal and state level. Even as new players enter the industry, they are bound by these rules and any disregard automatically means an end to their operations. When sweepstakes casinos came around, operators also had to follow these regulations, selling a free gaming model to consumers.

However, policymakers think that sweepstakes casinos have deviated from their original vision and have raised concerns regarding deceptive practices of selling credits and coins, and insufficient safeguards.

Truthfully, sweepstakes operators only had to look for loopholes in the legal gambling system and created a model that worked and met standards. This was the essence of the “no purchase necessary” system. However, policymakers are closing these gaps, by tightening the rules on the sweepstakes operators to protect consumers and ensure transparency. This poses a huge threat to the growth and success of the sweepstakes market and predictions show that its revenue will increase to $6.9 billion by 2025.

The Challenge of the iGaming Industry

Regulatory standards are a necessary must. Even if operators and players are uncomfortable with the system, its purpose is to protect them. It also aims to ensure transparent and safe gambling in the United States and beyond. Compliance with these rules is a must and failing to adapt results in closure.

Furthermore, if the regulatory bodies associated with sweepstakes and online gambling took stricter rules, this could affect operators, consumers, and the industry at large. For instance, small sweepstakes operators struggling to keep up with running costs and meeting compliance standards may have to close down. Even big operators will find themselves in a dilemma. In turn, this affects the users of such platforms, forcing them to go for other options or give up gambling.

Ultimately, the iGaming industry would suffer as there would be limited key players (i.e., gamblers and operators) contributing to its growth.

Unless industry leaders voice out their concerns with the authoritative bodies, working out a deal that favors them, meets compliance standards, and benefits the customers, this market may experience a decline.

John Peterson, a Sweepstakes Casino analyst said:

“There is a need for regulatory oversight, but there is no way these rules won’t affect operators and players. Personally, I believe a phased approach should be implemented to ensure the industry adapts more smoothly with the new rules.”

Path Forward – The Industry’s Future

There is no telling what will happen next. Regulatory demands will always persist and operators will have to meet them. As the sweepstakes market remains at a crossroads, its fate rests on the industry’s ability to adapt under a changing regulatory landscape.

Sources:

• “The Rising Popularity of Sweepstakes Casinos: Global Growth of Sweepstakes Industry” https://crustlab.com/blog/popularity-of-sweepstakes/. Crustlab. October 31, 2024.
• American Gaming Association: Premier national trade group for the U.S. casino industry;
• National Council on Problem Gambling (NCPG): US National nonprofit organization looking to mitigate gambling-related harm.