Florida Authorities Gunning for Sweepstakes After VGW Action

Florida is pursuing sweepstakes with a vengeance after the state attorney-general, James Uthmeier, sued VGW and Stake.us.

The news comes in a week when VGW – the operator behind many of the biggest sweeps casinos – closed one of its major slots sites.

VGW currently operates Chumba Casino, Global Poker, and LuckyLand. However, it now finds itself on the wrong side of the law in the Sunshine State over running “unlicensed online casinos”.

Separate Suits Filed Against VGW and Stake.us

In a statement issued on Wednesday, Uthmeier alleged that the defendants are “operating illegal online gambling enterprises” that violate state gambling laws in Florida. The operators also, the statement set out, are also violating the Florida Deceptive and Unfair Trade Practices Act.

The attorney-general highlighted the similarities between sweepstakes casinos and real-money gambling sites, saying, “if it looks like a casino, takes real money like a casino, and pays out like a casino, it is a casino.” He went on to highlight the “deceptive marketing” used by the sweepstakes casinos.

Stake.us was hit by a separate suit, highlighting the use of Stake Cash that “resembles poker chips in a brick-and-mortar casino.”

Once a customer has wagered Stake Cash three times, the lawsuit explains, “it can be cashed out for real money or cash equivalents.” This, the AG states, is illegal under Florida gambling law.

How ‘Dual-Currency’ Models Differ from Real-Money

Sweepstakes casinos have long bypassed existing state laws by offering “dual-currency” gameplay.

It’s oftentimes free to sign up to sites, whereafter you can purchase bundles of additional Gold Coins to play with. These have no monetary value.

However, sweepstakes casinos also offer Sweeps Coins, usually through purchases or competitions. These do carry monetary value if you manage to win through eligible slots and table games. Prizes are normally redeemed as giftcards or cash.

Currently, Florida prohibits real-money online casinos, unlike a handful of states that includes Pennsylvania and New Jersey.

Payment Processors Included in Action

Sweepstakes players’ ability to cash out “winnings” has meant some payment processors have been caught up in the Florida legal action.

Payment processors that work with VGW, including Worldpay and Trustly, are being targeted in the suit.

The action against Trustly may alarm the market, given that it’s one of the largest payment processors in the world. Trustly is used by online casinos as a third-party processor facilitating swift bank transfers.

VGW Loses LuckyLand Slots as Legal Issues Catch Up

VGW has already decided to close one of its major sweepstakes casino sites, LuckyLand Slots. The site is in its final week of operations in the U.S. following a series of legal challenges.

However, VGW’s major brands, such as Chumba Casino and LuckyLand, will continue to operate.

Gameplay at LuckyLand Slots winds down August 24 but customers have until September 14 to redeem any outstanding giftcards.

Indiana, Iowa Among States Cracking Down on Sweeps

Multiple states are stepping up their anti-sweepstakes casino legislation, particularly where no real-money gameplay exists.

In May, Iowa governor Kim Reynolds signed sweeping powers allowing the Iowa Racing and Gaming Commission to pursue sweepstakes casinos. The crackdown came into force on July 1 after Reynolds signed Senate File 2289.

Indiana was also among states to issue cease-and-desist letters to sweeps casinos this year.

However, Maine has gone one further and has banned sweepstakes casinos outright following a change in the law. The legislation effectively came into force on July 14, with sites facing $10,000 fines if they contravene the law.