An Introduction to Sweepstakes

Sweepstakes, sweepstakes, sweepstakes! It is all that everyone is talking about at the moment. I'd go as far as saying that it is as hot as Artificial Intelligence.

While sweepstakes casinos have existed for a long time, the growing interest has been making waves in almost every iGaming discussion, podcast, article, and conference since 2024 began, and with good reason.

*This two-part Sweepstakes Series will focus on the US Sweepstakes market.

The big question on everyone's lips is, "What is a sweepstakes casino?"

Today's article aims to clarify some key focus areas that operators should know and understand when considering a venture in the world of sweepstakes.

Unlike conventional iGaming products, sweepstakes platforms provide players, particularly those residing in states where online gambling is prohibited, the chance to partake in casino-styled games for free while still having the chance to win cash and other prizes.

Furthermore, what separates sweepstakes casinos from iGaming casinos is the deployment of a dual or multi-currency playing system.

By operating within United States sweepstakes laws, sweepstakes casinos provide a safe and legal alternative for online gaming enthusiasts, cleverly navigating regulatory challenges.

What is a Sweepstakes Casino?

A sweepstakes casino, also known as a sweeps casino or sweeps coins casino, is a unique online gaming platform that operates within a distinct legal framework. It offers casino-style games through a sweepstakes model, enabling legal gaming in regions where traditional online gambling is restricted.

Let's dispel a common misconception. Sweepstakes casinos do not involve real money wagers or winnings. Instead, they operate on a "freemium" model featuring two distinct currencies:

• Game Coins (GC): These virtual tokens, freely available or purchasable, function as play money for accessing games and enjoying in-game features.

*Game Coins are for entertainment and practice purposes only and hold no monetary value.

• Sweep Coins (SC): Acquired through gameplay or promotions, these function as sweepstake entries for prizes and options offering real-world rewards, like cash, gift cards, or merchandise.

*Sweep Coins are used to participate in games with the opportunity to win real cash or prizes.

While alternative currencies and coins are offered on certain sweepstake platforms and may have various names, their underlying function typically mirrors the aforementioned two coins.

Sweepstakes casinos operate within a dual currency system to adhere to sweepstakes laws, which emphasise the "no purchase necessary" principle.

Are Sweepstakes Casinos Legal?

The legality of sweepstakes casinos in the United States is subject to variation depending on state laws and interpretations. While federal regulations provide a general framework, state-specific laws can impose additional restrictions or interpretations, influencing the operation of sweepstakes casinos. States like Washington, Idaho, Nevada, and Michigan have distinct stances impacting sweepstakes casino operations within their jurisdictions.

Sweepstakes casinos have not gone without their legal hurdles, offering valuable lessons for the industry.

One notable incident from September 2022 involved VGW Holdings, the company behind Chumba Casino, the largest US-facing sweepstake, which was hit with a class action lawsuit worth $11.75M in Kentucky. The class action lawsuit alleged that VGW were non-compliant with sweepstakes laws. The lawsuit resulted in a settlement where Kentucky residents received compensation for their 'losses'.

VGW Holdings responded to the tightening regulations by ceasing operations for players in Michigan. This decision reflects Michigan's increased efforts to regulate online gaming, signalling a significant development in the state's management of the digital gaming sector.

In addition to withdrawing from Michigan, VGW agreed to implement 'responsible gambling' features. These include adding a self-exclusion option for players who no longer wish to play, as well as having responsible gambling information available on their website.

To ensure its products remain “free” and “not gambling” in the eyes of the law, VGW agreed to change its Game Rules so that players can continue to play certain slots for free even if they run out of virtual coins.

Can Anyone Play in Sweepstakes Casinos?

Based on US sweepstakes regulations, the short answer is "no".

The legal age for participation varies between states, with some states allowing individuals as young as 18 to engage and play while others mandate a minimum age of 21, aligning with traditional casino gambling ages. This underscores the need for players to understand local regulations to ensure compliance.

While sweepstakes casinos offer a legal alternative to online gambling, some states impose specific restrictions, such as only accepting GC or limiting prize winnings.

Despite their widespread legality, caution is advised due to the presence of unscrupulous operators. It's essential for players to verify the legitimacy of sweepstakes sites to avoid legal issues.

Nonetheless, one consistent regulation that players must be at least 18 years old to participate in sweepstakes casino games echoes responsible gambling standards.

"Redemptions": What Are They?

An integral aspect of the sweepstakes casino model lies in the mechanism through which players exchange SC for tangible rewards, including real cash. This system is meticulously crafted to align with legal requirements, ensuring a transparent and secure transition from virtual gameplay to physical or real cash prizes.

It is often exclaimed on sweepstakes casino platforms that for redemption purposes only, 1 SC is redeemable for $1 USD. Furthermore, in almost all redemption cases, sweepstakes will not acknowledge SC's monetary value until a redemption request has been approved and processed.

Unlike iGaming brands, where players transact and withdraw, there are no transactional movements of monetary value on a sweepstakes casino. In other words, there are no withdrawals.

*Terminology is crucial when outlining a sweepstakes casino to ensure accuracy and compliance in player actions and product definitions.

Redemption Processing and Operator Considerations:

• Redemption Criteria: Before redeeming SC for cash prizes or other incentives, players must satisfy specific criteria. These criteria are established to uphold legal standards and prevent fraudulent activities.
• Identity Verification: Players are required to undergo a Know Your Customer (KYC) verification process to confirm their identity and account details. This step is essential in deterring underage gaming and verifying players' eligibility for participation and prize receipt.
• Wagering Conditions: Certain sweepstakes casinos mandate that players wager their SC a predetermined number of times before becoming eligible for redemption. This condition, varying across platforms, encourages active engagement in games.
• Minimum Balance Requirement: Players typically need to amass a minimum quantity of SC before initiating the redemption process. This threshold fosters continued participation and interaction with the sweepstakes casino's offerings.

Redemption Methods:

Sweepstakes casinos provide diverse options for players to exchange their SC, catering to varied preferences and ensuring accessibility.

• Bank Transfers: Many sweepstakes casinos facilitate direct transfer of redeemed cash prizes to players' bank accounts, offering a simple and secure redemption option.
• Gift Cards: Alternatively, some sweepstakes casinos enable the redemption of SC for gift cards from prominent retailers, enhancing flexibility in the redemption process.
• E-Wallets: Reflecting contemporary payment trends, several sweepstakes casinos support redemption via e-wallets, providing expedited and sometimes more convenient redemption alternatives.

What Are Sweepstakes Casino Games?

It is undeniable that sweepstakes casino games closely resemble traditional online casino games in terms of offerings and, in many ways, functions and features. The sweepstakes casino game library boasts similar versatility, but with added profitability, given that, there's no obligation to use real money.

Playing games in sweepstakes casinos affords players an experience akin to real-money online casinos, with the added benefit of utilising SC without any need to deposit funds into an account. While the option to purchase GC remains discretionary, players can enjoy sweepstakes casinos and win real cash or prizes without spending a dime.

Sweepstakes Casinos Appeal and Game Options

The appeal of sweepstakes casinos goes beyond their innovative legal framework to encompass the diverse array of games and enticing bonus structures they present.

These platforms deliver an immersive online gaming experience comparable to traditional casinos, appealing to a broad audience with varied interests and possessing an element of gamification unique to sweepstakes casinos.

The Typical Assortment of Sweepstake Casino Games

Slot Games: A cornerstone of traditional and sweepstakes casinos, slot games offer many themes and formats. Today, you will find all slot types on sweepstakes casinos, from classic three-reel slots to video slots, multi-payline, progressive jackpots, and Megaways.

There are a ton of familiar game studios and providers available on sweepstakes casinos. While the examples below highlight a few known companies from iGaming, there are plenty of others that have entered the sweepstakes casino space:

• ARRISE powering Pragmatic Play
• NetEnt
• Relax Gaming Ltd
• Slotmill
• Betsoft Gaming
• BGaming
• Evoplay
• Habanero Systems

Table Games: Players can indulge in various casino table games, both in Live Dealer format and classic Random Number Generator (RNG) online tables like blackjack, roulette, craps, poker, and baccarat. These games often come in various iterations, providing an authentic gaming experience suitable for both novices and seasoned players.

Crash Games: As a more recent addition to the sweepstakes casino landscape, we see the popularity of crash games. A crash game is where players place bets on a multiplier that increases until it crashes. The game's goal is to "cash out" before the multiplier crashes.

That concludes today's introduction to sweepstakes casinos and the areas of importance for Social Casino and iGaming operators considering expanding into this exciting market.

Next week, WarriorLab will power a continuation of this current hot topic in the second article of this Sweepstakes Series. Next week's article will focus on the intricate sweepstakes strategies surrounding VIP programs, monetisation and how sweepstakes casinos make money, Alternate Methods of Entry (AMOE), bonuses and promotions, and the power of social and player engagement.

Disclaimer: The VIP Topics, Opinions, and Insights presented in this post are intended to encourage discussion and possible debate. It is important to note that each post is not intended as professional advice. It is highly recommended to consult with qualified experts or VIP professionals who can provide guidance tailored to your specific needs and circumstances before attempting to launch a VIP Player Management strategy or program.