A newly proposed bill in the New York State Senate is drawing sharp criticism from promotional sweepstakes advocates, who warn it could effectively outlaw popular loyalty programs like Starbucks for Life, Marriott Bonvoy Experiences, and even Microsoft Rewards.
Senate Bill S8935, currently under consideration by Governor Kathy Hochul, is framed as a crackdown on “social casinos” – online platforms where users can play casino-style games without risking real money. However, critics argue the bill’s vague and sweeping language would do much more: criminalize promotional sweepstakes games used by Fortune 500 companies and stifle investment in digital rewards platforms nationwide.
Why It’s Not Just About Gambling
Unlike other state bills aimed at curbing social casinos, S8935 goes further by targeting the infrastructure behind these promotions. If passed, it would make it illegal for:
- Investors or venture capital firms to fund sweepstakes-based startups
- Media affiliates to promote them
- Banks or financial services to process payments or partnerships
Violators could face fines up to $100,000 per incident, as well as disqualification from future state gaming licenses. No distinction is made between real-money gambling and legitimate marketing promotions such as rewards points, digital engagement campaigns, or loyalty-based sweepstakes.
“That’s not regulation. That’s a full-scale deterrent to anyone looking to fund or build the next big idea in digital entertainment,” said a representative on background from the Social and Promotional Games Association (SPGA), which is lobbying against the bill.
Could Microsoft Rewards Be Illegal in NY?
The SPGA provided a fact sheet analyzing how Microsoft’s $2 million Rewards Sweepstakes would qualify as an “illegal online sweepstakes” under the bill:
- Available online
- Uses a dual-currency system (points + sweepstakes entries)
- Offers cash-equivalent prizes
- Simulates a lottery draw
If the New York Gaming Commission interprets these mechanics as “simulated gambling,” platforms like Microsoft Rewards—where users earn points through search engines, purchases, and Xbox activity—could fall under scrutiny.
Other mainstream campaigns potentially affected include:
- Starbucks for Life holiday promotions
- Marriott Bonvoy Moments and experience giveaways
- AARP sweepstakes used to engage members
- Retail loyalty platforms that gamify points-for-prizes systems
A Chilling Effect on Innovation
The implications for this bill could go well beyond both sweepstakes casinos and the Empire State. With New York being a financial and media hub, regulation here often sets a precedent for national platforms.
“This bill chills innovation far beyond state lines. It tells investors, founders, and digital media platforms: ‘If you’re trying something new—even if it’s legal, you may be penalized,'” said the SGPA. “That undermines not just sweepstakes, but any future pre-regulated model that could evolve into the next FanDuel, Spotify, or TikTok.”
By granting broad discretionary power to the New York State Gaming Commission, S8935 would allow the agency to determine what qualifies as gambling-like behavior, even in non-casino contexts.
No Evidence of Harm
Supporters of promotional sweepstakes note that most platforms:
- Operate legally under federal and state promotional laws
- Use age gates and fraud detection
- Require no purchase to play and award prizes at random
Yet there has been no clear evidence of consumer harm presented by bill proponents, a fact critics say undermines the case for such sweeping restrictions.
National Consequences If Signed
States like Florida and Maryland have recently rejected similar bills due to their broad implications. If Governor Hochul signs S8935 into law, New York would become the first state to criminalize common digital loyalty mechanics, potentially isolating itself from future tech and marketing innovation.
Read More: US Sweepstakes Casino Laws