The Current: NY Gaming Commission Eyes Action Against 'Unlawful' Social Gaming
Plus gambling news roundup: FanDuel Sports Network layoffs; DraftKings settles NFT lawsuit with NFLPA
The first month of 2025 hasn’t been the greatest for the sweepstakes industry in terms of potential legislative and regulatory pushback, including a few things that cropped up just yesterday. Let’s review, starting with some information out of the New York State Gaming Commission in a meeting held on Monday.
The chairman of the New York State Gaming Commission noted his concern about “social gaming” in a meeting on Monday, using a description that would seem to cover sweepstakes casinos, in addition possibly to social casinos that don’t use a sweepstakes dynamic. (I have asked the NYSGC for clarification on exactly what they are taking issue with). The main bit from Chairman Brian O’Dwyer:
"There are operators conducting business inside our State that are running afoul of New York’s penal restrictions on unlawful gambling. Staff have made several referrals to law enforcement and is assisting in case development."
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He said he would update the commission in its next meeting, which has not been announced but would seemingly take place in February or March. Twitter thread here, or watch the meeting here (starting about the 16-minute mark).
The Social and Promotional Games Association offered this statement after the NYSGC meeting:
Social casinos with sweepstakes prizing are a safe and legal form of entertainment enjoyed by millions of Americans. The practice of utilizing a prize-based sweepstakes as a promotional tool to incentivize consumers is a well-established one in most states.
Like social games such as Zynga and Candy Crush, the vast majority of social sweepstakes players play for free, with no purchase necessary. Some players choose to pay to enhance their experience, but the amount of money they spend is very low, typically $1 or $2. Most players never spend money.
Other news of late:
A Mississippi senator introduced a bill to ban sweepstakes gaming in the state. Story here, bill here.
A bill to legalize online casinos in New York would seek to bring sweepstakes casinos under the same law; it wouldn’t appear that outcome would be a good one for the sweepstakes industry writ large. While the bill’s sponsor said sweepstakes are legal now, he also said the industry amounts to gambling. An online casino bill passing remains (at least for now), a decided underdog.
A bill in New Jersey would seek to regulate sweepstakes casinos under existing law but perhaps short of the same regulation that actual online casinos face. While the aforementioned SPGA has said it “welcomes” the bill, it’s a bit unclear how beneficial this might be for the industry, and even less clear this has a path to passage.
Earlier this month, Maryland regulators sent cease-and-desist letters to a handful of sweepstakes operators.
While nothing of substance has happened publicly in California, tribal gaming continues to take an adversarial stance toward the industry.
All of this comes after model legislation proposed by the National Council of Legislators from Gaming States would ban sweepstakes casinos and sportsbooks.
How much of this is signal vs. noise? That’s perhaps in the eye of the beholder. If all of this gains traction, it’s an existential threat to the sweepstakes industry. Of course, it’s extremely unlikely that all of it, or even a substantial amount of it, comes to fruition in the short term. The worst of those in the short term is New York and Maryland, but it doesn’t appear that any of the operators that were sent letters have exited the state in the latter.
The current threat to the industry is less a small amount of regulatory action and more the pure volume of action and the optics around the industry.
The sweepstakes industry can absorb negative outcomes in multiple states — at least as long as those states aren’t California, New York, Texas and Florida. Sweepstakes operators generally serve anywhere from under 40 to as many as 48 states, depending on the operator, their risk tolerance, and the legal opinions they’re operating under. The members of the SPGA are not homogenous in the states they serve.
However, the more efforts like the above there are:
The more likely one or more of them gets to the finish line.
The more policymakers and regulators pick up on the trend in other jurisdictions.
The less likely it becomes that an operator in the regulated space makes an attempt to get into sweepstakes (at least under the same model).
It’s akin to what’s happening in regulated sports betting in terms of efforts to raise taxes, limit advertising or otherwise rein in how the industry operates. Single suboptimal outcomes aren’t terrible; the risk is in so many of these efforts existing in parallel and being talked about in a variety of channels and states.
Or it’s all a big nothingburger and we all carry on with our lives. But the reality, like all things, is probably somewhere in between two extreme outcomes.
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Gambling news today
FanDuel Sports Network laying off around two dozen staffers amid cost cutting (Awful Announcing): “FanDuel Sports Network, fresh out of bankruptcy, is laying off around two dozen staffers, which will particularly affect the company’s digital operations. ‘After careful analysis, we’ve made the decision to rebuild our digital and social efforts in a way that better supports our direct-to-consumer growth and helps scale the business,’ a spokesperson for Main Street Sports Group, FDSN’s parent, wrote in a statement. ‘Unfortunately, this shift has led to the difficult decision to part ways with some team members whose roles and skillsets supported our previous strategy.’
US Sportsbooks Barreling Toward Record-Setting Super Bowl 59 (Legal Sports Report): “Regulated sportsbooks in the US are once again gearing up for the biggest event on the calendar: Super Bowl Sunday. The NFL season peaks on Feb. 9 with a powerhouse Super Bowl 59 matchup between the Philadelphia Eagles and the Kansas City Chiefs that will generate more than $1.5 billion in legal wagers nationwide. Record-setting handle for the game creates nine figures of revenue potential for sports betting operators, though how much customers win or lose hinges on the result. Almost 225 million Americans across 40 states and territories have access to legal Super Bowl betting in their local market this year.”
DraftKings settles NFL players union lawsuit over NFT contract (Reuters): “Sports-betting giant DraftKings has resolved a lawsuit brought by the National Football League Players Association for allegedly failing to pay for using NFL player likenesses, according to a joint filing on Monday in New York federal court. The NFLPA and DraftKings told the court that they had settled the case in principle and asked for a pause while they finalize their agreement. Spokespeople and attorneys for the parties did not immediately respond to requests for comment and more information.”
CFTC to tackle prediction markets in roundtables (CFTC): “Commodity Futures Trading Commission Acting Chairman Caroline D. Pham is launching a series of public roundtables on evolving trends and innovation in market structure, including issues such as affiliated entities and conflicts of interest, prediction markets, and digital assets. Pham renewed calls for open public engagement and increased transparency by the CFTC on its policy approach to changes in derivatives markets last year. ‘As I have long said, the CFTC must take a forward-looking approach to shifts in market structure to ensure our markets remain vibrant and resilient while protecting all participants,’ Pham said. ‘Innovation and new technology has created a renaissance in markets that presents new opportunities that are accessible to more people, as well as risks. The CFTC will get back to basics by hosting staff roundtables that will develop a robust administrative record with studies, data, expert reports, and public input. A holistic approach to evolving market trends will help to establish clear rules of the road and safeguards that will promote U.S. economic growth and American competitiveness.’
Will Sports Betting Force the NFL to Fix Its Bad Calls? (column, Bloomberg, paywall): ”Historically, the National Football League hasn’t had to worry about disappointing its emotionally invested spectators with bad officiating. Diehard fans will complain and tune in anyway. But since 2021, there’s been a shift. That’s when the NFL partnered with legalized gambling companies to provide viewers the chance to become financially invested in game outcomes, too. And those fans are a mixed bag of hardcore football lovers and casual spectators looking to try their luck at making some extra money; a good portion of the latter may not wager or watch if they don’t trust the competence and integrity of the referees.”
Why States Took a Gamble on Sports Betting (podcast, The Atlantic): A lengthy conversation with writer Danny Funt, who is the author of an upcoming book on sports betting. Summary:
“On today’s episode of Good on Paper, I talk with the journalist Danny Funt, who has been reporting for years on a behavior that’s come under much scrutiny lately: sports betting. Renewed debate over bans on sports betting erupted into public view nearly seven years ago in a pivotal Supreme Court case. The decision opened the door to a variety of new state legalization schemes and the outcomes have been mixed, at best. Although states may have stumbled onto a new source of revenue (albeit weaker than some were expecting), it has come at a cost to gamblers’ financial and mental health. The results have turned even vocal proponents into skeptics.”
Worth noting there’s some sweepstakes conversation in here too:
”I mean there’s so many video games or phone-based apps where it’s like, Hey—do you want to buy some tokens with real money? And then you’re playing with tokens, and then you convert the tokens back to real money, so it’s very sly. There’s this whole phenomenon of what are branded as sweepstakes, where it’s essentially a loophole to allow people of all ages to risk money on sports, but it’s not called gambling. And you might remember: There’s a long history of things finding loopholes to offer gambling by a different name, most notably the whole daily-fantasy-sports boom that paved the way for sports betting.”
Circa Squares available in five states (Circa): One of the most casual and common ways to bet on the Super Bowl is available via the Circa mobile app in five states: Nevada, Colorado, Illinois, Iowa and Kentucky.
PENN claims top spot in latest All-Index inclusivity report (SBC Americas): “The All-In Diversity Project has named PENN Entertainment as the top operator in its latest All-Index report, which details workplace inclusivity across the gaming industry. The annual survey, open to all businesses in the global gaming industry, measures diversity, equity and inclusion efforts allowing companies to identify shortfalls, set goals and celebrate achievements. PENN scored as the top gambling company in the All-Index report followed by Entain and IGT. The All-In Diversity Project plans to release the exact scores of its report by mid-Q1.”
Increase in Lottery and Sweepstakes Scams Targeting New Hampshire’s Older Adult Population (NH DOJ): Unrelated to the conversation about sweepstakes above, it’s worth pointing out. “Attorney General John M. Formella issues a Consumer Alert for New Hampshire residents, especially its older adult population, concerning a rise in reports of scammers perpetrating lottery and sweepstakes scams. In these scams, a scammer contacts the victim and falsely claims that the victim has won a lottery or sweepstakes, such as the Publishers Clearing House (PCH) sweepstakes. The scammer tells the victim that before the prize money can be issued, the victim must pay certain fees upfront, such as taxes, legal fees, or processing fees. In many cases, the scammer instructs the victim to pay these fees by wire transfer, Bitcoin ATM, or prepaid gift or debit cards. In two recent reports, the scammers demanded fees in increments of $8,500.00.”
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