A proposal to regulate sweepstakes casinos was introduced in New Jersey on January 16, following increased scrutiny of these operations.

A recently proposed bill in the New Jersey Legislature seeks to regulate online sweepstakes casinos by incorporating them into the state\u2019s established internet gaming framework, requiring operators to obtain licenses and collaborate with Atlantic City casinos to comply with the law.

Assembly Bill 5196, introduced by Assemblyman Clinton Calabrese, proposes classifying online sweepstakes casinos as internet gaming operators, placing them under the same regulatory and tax obligations as other online gambling platforms.

This legislative move follows growing scrutiny in 2024 from regulators, media outlets, and courts, with critics claiming that unregulated sweepstakes sites amount to illegal gambling.

Under the proposed legislation, sweepstakes casino operators would be required to obtain a casino service industry enterprise license and undergo independent third-party audits every six months to ensure compliance with operational integrity and financial requirements.

Additionally, operators must partner with an existing Atlantic City casino and secure an internet gaming permit to legally operate.

The bill empowers the Division of Gaming Enforcement to collaborate with law enforcement and telecommunications providers to combat unauthorized sweepstakes casinos. Violators would face steep penalties, including fines of $1,000 per player per day for facilitating illegal internet gambling and $10,000 for advertising unauthorized services.

Licensed operators would be held to the same standards as other internet gaming businesses, including mandatory age verification to prevent underage gambling, employee background checks, and the payment of licensing fees and taxes on gross gaming revenue.

If enacted, the legislation would become effective 30 days later.

Notably, model iGaming legislation proposed by the National Council of Legislators from Gaming States (NCLGS) in November recommended a ban on sweepstakes casinos, providing an alternative approach for states considering legalization.

Daniel Wallach, sweepstakes critic and attorney, mentioned:

A sweepstakes casino legalisation bill stands almost no chance of passing in New Jersey, where regulated casinos represent the most powerful lobbying force in the state.

There’s virtually no likelihood that such a bill would bypass the objections of the regulated casino industry. Additionally, constitutional restrictions may make the legalisation of sweepstakes casinos a tough sell legally.