New Jersey Assemblyman Clinton Calabrese introduced Bill A5196, which, if passed, would make the Garden State the first market to legalize and regulate online social casinos, also known as sweepstakes casinos.
The bill aims to integrate online social casinos into New Jersey’s regulated gaming industry. As one of only seven states that regulate online casinos, New Jersey already boasts a thriving market with over 30 licensed operators offering slots, table games, and live dealer games. The state also permits online sports betting and is considered one of the most established legal online gambling markets in the US.
Currently, sweepstakes casino and social gaming remain unregulated nationwide and banned in Idaho and Washington, with a few states, including Nevada and Michigan, restricting many sites. However, social casinos continue to grow in popularity and have sparked ongoing industry debates about the need for regulation.
The Bill to Align Sweepstakes Casinos with All Other Forms of iGaming
Assemblyman Calabrese’s proposed amendment expands the existing state legislature by including online sweepstakes casinos among the gambling entities requiring regulation.
According to the amendment, this form of gambling is defined as follows:
“Online sweepstakes casino’ means any platform available via an Internet website or mobile application that
(1) provides participants with an opportunity to play authorized gambling games or provides an experience equivalent to, or with similar statistical odds of winning as an authorized gambling game, except that the game does not require any initial monetary investment on behalf of the participants to play and instead is played primarily with free currency;
(2) awards to participants at random, as a bundle with the purchase of free currency, or upon the completion of certain specified tasks, currency or promotional gaming credits which can be wagered on games and are redeemable for cash, prizes, or other things of value. An online sweepstakes casino may additionally offer tokens, coins, chips, credits, or other forms of currency for purchase or exchange that are directly redeemable for cash, prizes, or other things of value.”
The Social and Promotional Games Association (SPGA) has expressed support for the bill, emphasizing that its members advocate for clear regulations. Founded in September last year, the SPGA aims to promote responsible operations and ensure transparency in social gaming through education, advocacy, and consumer protection measures.
The Bill Would Require Sites to Obtain a License
If passed, the bill would mandate that online sweepstakes operators obtain a casino service industry enterprise license from the State of New Jersey.
Additionally, operators would be required to submit an independent third-party audit to assess the integrity of their operations and financial standing as a condition for receiving an initial license. To maintain their license, they would need to provide updated audit reports biannually.
The New Jersey Division of Gaming Enforcement would have the authority to collaborate with law enforcement agencies to investigate and penalize unlawful online sweepstakes casinos.
While the bill does not specify the licensing and tax structure for these operators, it states that penalties would align with those imposed on other internet gaming operators. These include fines of $1,000 per player per day for making their premises available for internet-based casino wagers and $10,000 per violation for unauthorized advertising.
The Popularity of Social Casinos in the US Continues to Grow
This surge in popularity is largely driven by players seeking a risk-free and legally accessible gaming environment.
With traditional online gambling heavily regulated in certain states, an increasing number of players are turning to social and sweepstakes casinos. These platforms offer a wider selection of popular casino-style games, while allowing users to play with virtual coin-based currencies. Many social casinos also provide the opportunity to win real prizes, making them an attractive alternative to traditional online gambling.
As most states still lack regulated online gambling markets, many players face limited options – either gambling illegally on offshore platforms or turning to sweepstakes casinos as a legal alternative.