New Jersey Prepares Law to Regulate Sweepstakes Gaming

A new stage in online gambling licensing in the USA?

For the first time in the United States’ history, a state legislature will consider a law to regulate gambling sites operating under the "sweepstakes" model.

New Jersey Assemblyman Clinton Calabrese introduced Bill #5196, stipulating that sweepstakes operators must apply for a license.

Background: The "sweepstakes" model allows players to purchase virtual currency and receive bonus coins. Bonus coins cannot be purchased directly but can be exchanged for money. All bets on the sites are made using one of these two digital currencies.

The Sweepstakes Game has been gaining a significant market share, but licensed operators and authorities do not like it.

Calabrese says the lack of regulation in this area brings social problems and does not contribute to the budget.

One of the goals of Law #5196 is to ensure the development of a safe and responsible gaming environment in New Jersey. The law's author believes that the existing law in the state can serve as a basis for this.

The law is currently under review by the New Jersey Assembly Tourism, Gaming, and the Arts Committee. It would have to pass through both state houses in this year’s legislature. If the parliament approves the initiative, the new law will come into effect once Governor Phil Murphy signs it.

How would the law affect the Sweepstakes Game?

The Sweepstakes Game has been operating in the United States for several years. Various activists have tried to draw attention to it during this time.

For example, there are several lawsuits against Virtual Gaming Worlds (the owner of Global Poker) in at least 10 states. The plaintiffs claim that the company offers real-money games disguised as two virtual currencies. The list of states where Global Poker has stopped operating recently grew to five (Washington, Michigan, Montana, Nevada, and Connecticut).

Introducing this new law in New Jersey could cause other states to seek a Sweepstakes Gaming license. The prohibitions on sites that operate with this mechanic could also be increased.

Then, 2025 could be a decisive year for developing the Sweepstakes Gaming model. The industry can join the illegal offshore gaming operators or try to integrate into the new legislative reality.

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