Sweepstakes aren’t ‘clear cut,’ and that’s a problem, AGA executive says

Chris Cylke just wants clarity. As the American Gaming Association (AGA) joined Indian Country in a discussion of how to handle an unregulated, untaxed form of gambling, the key is understanding where it sits in a legal sense, he said.

Cylke, the AGA’s SVP for government relations, joined Indian Gaming Association (IGA) conference chair Victor Rocha and IGA executive director Jason Giles Wednesday (30 October) in another unique moment in the short history of legal sports betting in the US. Rocha is hosting a five-part educational series on what sweepstakes are and how the regulated industry can fight their proliferation.

“If sweepstakes gaming were as clear cut as those involved with it are saying, we probably would be doing it,” Cylke said AGA members have told him. “But it’s not worth putting (their) gaming licenses at risk.”

Yes, sweepstakes have a politics problem

Cylke called the status of sweepstakes “murky.” And Giles said it falls into the category of other currently or previously unregulated forms of gambling — including fantasy sports. In order to eradicate or at least regulate sweepstakes — or pick’em fantasy or skill games, for that matter — the industry must engage law enforcement. Or get state or federal legislators or regulators to tackle the issue.

“Part of the problem is that (attorneys general) are usually looking for higher office, so it is not a priority,” Giles said. “And it’s not that interesting. Honestly, the idea of people sitting down to play free games (at home) is a little weird. 

“Look at Virginia, you have an AG who is more concerned with preventing the marijuana rollout, but you still have these illegal machines everywhere. I don’t know how you get it to a higher level. Does there need to be some huge scandal? That’s not what we want. That doesn’t serve Indian Country well at all.”

Giles went on to say that he expects sweepstakes to take the same route to acceptance as fantasy sports initially did. He said that when DraftKings and FanDuel first started offering games, they, too, were in a grey area. Most jurisdictions did not explicitly prohibit or allow them. That is still the case in some US states, including California.

“They get it out there, the goal is saturation” and then it is hard to remove, Giles said. “It’s a fraught deal, and politics is definitely part of it. Look at Louisiana, where (the argument about displaying the) Ten Commandments is more important than illegal gambling.” He added that opponents will eventually have to prove that sweepstakes sites are a real threat.

Remember McDonald’s Monopoly and Ed McMahon?

Therein lies a conundrum. More traditional sweepstakes are generally considered a non-threatening part of American culture. Giles and others point to the McDonald’s Monopoly game or Ed McMahon schilling for Publisher’s Clearinghouse as examples.

But the latest interpretation of sweepstakes goes beyond free-play games. Consumers can upgrade their play by buying coins, or something similar. At that point, the paid games look remarkably similar to regulated casino games or sports betting platforms.

“The line that we hear is that sweepstakes are a well-established area of the law,” Cylke said. “They have been used for years. ‘McDonalds, Ed McMahon, there’s nothing to see here. We have all these legal opinions here. We’re innovating here,’ they say. While Ed and McDonald’s may be on solid ground here, when you apply it to online casino gaming, it’s murky at best.”

Rocha said his goal with the series of webinars is to educate California’s tribes, who have exclusivity for casino gaming in California. And the nation will be watching how the tribes move forward as they reconsider a voter initiative to legalise sports betting. The state AG is currently reviewing the status of certain fantasy games, which the tribes believe encroach on their monopoly.

‘Manifest destiny’ all over again?

But whether it is sweepstakes or pick’em fantasy, Rocha said the companies are hiding behind the idea that they are pioneering a new form of gambling.

“When these companies come in and say they are innovating it resonates like manifest destiny,” he said. “But you’re starting to see a public change. All of these lawsuits against (black-market operator) Bovada, and in Massachusetts that lawsuit against DFS 2.0 (pick’em). You’re starting to see a change. If you stop them in California, that will be really detrimental to them across the country and the world.”

Wednesday’s webinar did not end with a plan, but like last week’s, when Rocha invited Sports Betting Alliance lobbyist Jeremy Kudon for a visit, it ended with a handshake agreement to join together against a common threat.

“How do we collaborate? Rocha asked Cylke.

“We educate,” he said. “And we make a commitment to work together.”