Montana is on the verge of becoming the first U.S. state to enact legislation directly targeting sweepstakes casinos, pending a final decision by Governor Greg Gianforte. Senate Bill 555 (SB555) has cleared both the state House and Senate and now awaits the governor's signature.
Key Takeaways
- Montana may become first U.S. state to ban sweepstakes casinos with SB555 legislation
- Bill targets online platforms using any currency and offering cash payouts through casino-style games
- Legal ambiguity remains around non-cashable currencies used in purely social or freemium casino apps
The bill amends Montana's existing gambling statutes to specifically define and criminalize illegal internet gambling. The bill includes language that appears to directly target the model used by sweepstakes casino operators.
The bill has a provision that reads, "Internet gambling includes online casinos, by whatever name known, which constitute internet gambling and therefore are prohibited."
The broad language of the bill is meant to encompass the online casino websites that have exploited loopholes in the law to continue operating.
Sweepstakes casinos typically operate on a double-currency model. Gamers are able to purchase a base currency, which is typically referred to as Gold Coins, and play games for entertainment purposes.
Each time they make a purchase, players get a promotional currency, which is typically referred to as Sweeps Coins, to play sweepstakes-type games that award additional Sweeps Coins.
Operators argue that since gamblers do not pay directly to place bets for money and are provided with free Sweeps Coins, the system is not gambling under current definitions.
SB555 appears to contradict this interpretation by highlighting platforms that entail the acceptance of "any form of currency" for wagering and that provide for cash payouts. This would place the Sweeps Coin model squarely within the bill's grasp. But there remains ambiguity.
Legal loopholes still remain
SB555 does not define whether the term should include currencies like Gold Coins, which are non-cashable, in the new nomenclature. This uncertainty raises questions on the status of freemium casino-type apps or purely social casinos where there is virtual currency used for entertainment purposes but is non-cashable.
Several sweepstakes casino operators had already left the Montana market before the passage of the legislation. Virtual Gaming Worlds (VGW), the parent company of Chumba Casino and Luckyland Slots, departed Montana in anticipation of legal proceedings.
Earlier this year, Mississippi appeared poised to become the first state to pass similar legislation. But a bill that included sweepstakes casino provisions got entangled in broader gambling reforms, including a provision to legalize sports betting. That packaging ultimately kept things in limbo and gave Montana an opportunity to seize the regulatory initiative.
Gov. Gianforte's action will determine whether or not Montana ends up creating this new precedent.
If the bill is signed into law, it would also trigger broader national scrutiny of sweepstakes casinos.
