Should Sweepstakes Be Banned? Model iGaming Act Says Yes
A major shift in the online gaming landscape is underway as US state lawmakers, under the National Council of Legislators from Gaming States (NCLGS), introduce a draft of the Model Internet Gaming Act. One of its most notable provisions? A sweeping ban on sweepstakes—a move that has sparked debate among gaming communities and legal experts alike.
The Purpose of the Model Act
Designed as a framework for states considering the legalisation and regulation of iGaming, the proposed act aims to create a consistent and effective regulatory environment. Developed through extensive collaboration among lawmakers, gaming experts, and legal consultants, it seeks to align internet gaming operations with public policy while ensuring industry integrity.
The Case Against Sweepstakes
At the heart of the draft is the decision to prohibit sweepstakes, with strict penalties for violations. Offenders could face fines ranging from $10,000 to $100,000 per offence, and repeat offenders could see up to two years of imprisonment. The NCLGS argues that sweepstakes often operate in a legal grey area, blurring the lines between legitimate promotions and illegal gambling activities. By banning them outright, the act aims to close regulatory loopholes and establish clearer standards.
A Broader Regulatory Approach
Beyond sweepstakes, the draft covers key areas of iGaming regulation, including revenue generation, responsible gambling measures, and advertising guidelines. It proposes a 15% to 25% tax rate on iGaming operations, ensuring states benefit from a steady revenue stream. Operator and supplier licences would be valid for five years, with rigorous compliance measures designed to address inconsistencies in current state laws.
The act also mandates anti-money laundering (AML) protocols and Know Your Customer (KYC) procedures to safeguard gaming operations. Advertising regulations would prevent targeting vulnerable groups, ensuring promotions reach only those aged 21 and older.
💡 What is the “Model Internet Gaming Act”?
The “Model Internet Gaming Act” is a draft legislation developed by the National Council of Legislators from Gaming States (NCLGS) to provide a comprehensive regulatory framework for states considering the legalisation and regulation of iGaming.
💡 What are the key provisions of the draft legislation for Internet Gaming?
Key provisions include taxation rates between 15% and 25%, responsible gambling measures, stringent advertising standards, and the prohibition of sweepstakes.
💡 Why does the draft Model Internet Gaming Act prohibit sweepstakes?
Sweepstakes are prohibited because of legal concerns in several states, where their operations often blur the lines between legitimate promotions and illegal gambling.
💡 What are the licensing requirements proposed in the draft?
The draft proposes licenses for operators and suppliers, which would be valid for five years, with strict protocols to ensure compliance and maintain high standards of operation.
💡 What feedback or concerns have the public or stakeholders raised regarding the draft legislation so far?
Support for the goals of the Model iGaming Act stems from concerns about the potential for sweepstakes to be used as a cover for illegal gambling. Others see the provisions as too restrictive and could negatively impact legitimate promotional activities.