An online sweepstakes gaming company is taking over Publishers Clearing House (PCH).
Key Takeaways
- Two months after filing for bankruptcy, PCH sells for $7.1 million
- Starting as a magazine subscription service, PCH began offering sweepstakes and prize-based games in 1967
- ARB owns and operates Modo Casino, a sweepstakes gaming site
ARB Interactive, which operates Modo Casino, won a bid to purchase PCH for $7.1 million and will cover $378,000 in outstanding expenses, The Wall Street Journal reported.
The acquisition comes two months after the subscription-based sweepstakes promotions company PCH filed for Chapter 11 bankruptcy, claiming $40 million in debts.
“Pending court approval, we’re excited to begin this next chapter and deliver an experience that honors the legacy of the brand while earning the trust of a new generation of players,” Patrick Fechtmeyer, the co-founder and CEO of ARB Interactive, said.
ARB said it plans to continue PCH’s sweepstakes and prize-based games through a mobile-first, free-to-play platform.
Sweepstakes and promotions history
Founded in 1953 as a magazine subscription company, PCH began offering sweepstakes promotions and prize-based games in 1967 to boost subscription sales through Reader's Digest. They began offering prizes of $1 to $10 before mailings increased, raising the winnings to $5,000 and eventually $250,000.
However, the company ran into legal issues in the 1990s concerning the misleading of subscribers about their winning odds based on increased subscriptions. This led to a national settlement and eventually Congressional questions about PCH’s business model, which was shifting more toward online subscription sales.
In 2023, the Federal Trade Commission (FTC) issued warnings about PCH’s deceptive practices of leading consumers to believe that increased purchases helped their chances of winning free-to-play games. The FTC ordered the company to pay consumers $18.5 million, stop charging surprise fees, and overhaul its sweepstakes and promotions.
Operating scrutiny
ARB’s gaming site is a social casino that’s free to play, but users can purchase additional digital currency that can be exchanged for cash and prizes. The company is a member of the Social Gaming Leadership Alliance and has sponsorship deals with John Daly, Snoop Dog, and Professional Bull Riders.
Online sweepstakes games, which mimic legal and illegal slots and table games, have come under fire in recent years for operating without licenses and taxation. Miami-based ARB is also facing lawsuits in California, Illinois, and Tennessee.
Lawmakers in New York, Connecticut, Nevada, and Montana have passed bills that ban sweepstakes gaming companies from operating in their states. Other states have sent cease-and-desist letters to social sites for operating in jurisdictions with licensed, regulated online casinos. California is the latest state to challenge sweepstakes gaming.
