New Jersey lawmakers are moving ahead with bills to shut down sweepstakes casinos operating in the state. This represents a significant change in how Garden State has handled this fast-growing gaming sector. The proposed laws could completely reshape online gaming for residents.
Assemblyman Clinton Calabrese introduced Assembly Bill 5447, which would ban platforms that use virtual currency and give out cash prizes and create fresh penalties for unlawful gambling businesses. The bill sat without action for nearly eight weeks before it was unanimously approved by the Assembly’s Tourism, Gaming, and Arts Committee. The Division of Consumer Affairs and Gaming Enforcement would oversee compliance.
The sweepstakes casino business has grown tremendously across America. The market made around $3.1 billion in 2022. Experts think it will jump 31% annually and hit $6.9 billion by 2025. These sites let people play casino games with fake money instead of real cash. This lets them operate in states where traditional online gambling remains illegal.
Players who cannot access regular online casinos in their areas often look for other options. Some check out cryptocasino platforms that work with cryptocurrency transactions. These provide a different path for online gaming fans who want varied experiences outside the regulated market.
Stephan Finkel is the director of legislative affairs for the Attorney General’s office. He says New Jersey’s constitution requires voters to approve gambling activities. Since sweepstakes casino gaming never got voter approval through a referendum, he thinks it should be unconstitutional. Finkel also pointed out that these platforms are built to look different from what they are, which makes them unauthorized gambling operations.
The proposed laws specifically target the business model that sweepstakes casinos depend on. These platforms usually run two games simultaneously. One involves paid virtual coins with no cash payout, and the other uses sweepstakes coins that players can turn in for real prizes. The New Jersey bill would stop this dual-currency system by banning the purchase of coins or tokens that only allow sweepstakes entry.
The bills would also prevent sweepstakes winners from being picked based on sports events or contests. This would target platforms that mix sweepstakes mechanics with sports betting elements. This rule aims to close what lawmakers see as regulatory gaps that let operators circumvent existing gambling laws.
Industry representatives have had different reactions to these legislative developments. The Social and Promotional Games Association supported earlier regulatory efforts. They said clear regulations would help create transparent and responsible social gaming experiences. However, switching from regulation to prohibition has created uncertainty for operators serving New Jersey customers.
Governor Murphy formed New Jersey’s Responsible Gambling Task Force. The group recommended supporting legislative efforts to ban unregulated gambling, including sweepstakes casinos. The task force examined both regulated and unregulated gaming in the state. Their findings could strengthen the ban legislation.
The regulatory crackdown goes beyond New Jersey. New York has also moved to ban social casino sweepstakes models. The State Senate passed legislation prohibiting online sweepstakes games using dual-currency systems. This year, multiple states, including Connecticut, Louisiana, and Montana, have introduced similar prohibition bills.
Eric Scheffler from the Sports Betting Alliance said sweepstakes gaming represents a legal trick that lets operators copy online casino experiences while avoiding licensing, regulation, and taxation structures that state policymakers set up. He noted that without regulation, these platforms do not have to follow the advertising restrictions and responsible gambling measures that traditional operators must.
The timing of New Jersey’s legislative action matters because the state leads in regulated online gambling. New Jersey was one of the first states to legalize online casino gaming and brought substantial tax revenue from its regulated iGaming market. The proposed sweepstakes ban could protect this established regulatory framework from unregulated competition.
A separate bill, Senate Bill 4109, takes a different approach. It proposes to regulate sweepstakes casinos as internet gaming operators, requiring licensure and taxation within the existing framework. This alternative shows the ongoing debate about banning or regulating these platforms.
New Jersey’s decision on these bills will probably affect what other states do about sweepstakes casinos. Some states have already killed similar bills this year, but others are still working on them. How this turns out will shape the sweepstakes industry’s future.
If Bill 5447 passes, sweepstakes companies might leave New Jersey like they did in other states with bans. New Jersey wants tight control over gambling in the state, no matter how companies try to package it.
