Montana Takes Lead as First State to Prohibit Sweepstakes Casinos
Leaving no doubt about its seriousness in combating non-regulated gaming, Montana has become the first state to pass a bill that bans sweepstakes casinos. Violations will be classified as a felony.
Montana is the first state to ban sweepstakes casino apps.
Key Facts:
- Montana’s bill prohibits any online casino gaming, including a prohibition on sweepstakes casino apps operating in the state
- Violations of Montana’s sweepstakes casino ban may result in a $10,000 fine, felony, and imprisonment
- SPGA attacks law as “vague” and banning “free-to-play” games
Montana’s state legislature took an historic step today when Gov. Greg Gianforte signed Senate Bill 555 into law. The legislation bans online casinos in the state, making it the first to specifically ban any form of iGaming by statute.
The law is thought to target so-called sweepstakes casinos in particular. Sweepstakes casinos are free-to-play gaming apps that do not require real cash or tender funding.
Consumers can download these apps and play using tokens, coins, or other non-money forms. If they win at casino-style games, the tokens can usually be redeemed for prizes or even cash.
Sweepstakes casinos are unregulated, and typically operate on the edge of gaming laws, because they technically do not ask consumers to place their money at risk. However, many lawmakers in the United States view sweepstakes casinos as violating gaming law and skirting regulatory oversight.
Sweepstakes casino apps do not have to pay for a license and do not pay taxes in the states where they do business.
Montana’s bill actually bans all forms of internet casino gaming via either a mobile application or a website. The language clearly prohibits any form of online casino, whether for real money or tokens, etc.
The term internet gambling includes online casinos, by whatever name known, which constitute internet gambling and are prohibited. This includes but is not limited to any platform, website, or application that knowingly transmits or receives gambling information, allows consumers to place a bet or wager using any form of currency, and makes payouts of any form of currency.– SB 555, Title, Montana Senate, LegiScan
As a result of the passage of SB 555, Montana has banned any online casino platform, whether it relies on real-money funding or token-based play. Penalties for violating the law can be fines as much as $50,000 and up to 10 years imprisonment in what would be a felony offense.
Most states do not have a specified ban on online casinos, instead relying on language in their statutes that permit certain types of gambling. Montana has taken the bold step to ban any online casino.
States Reluctant to Legalize Online Casinos
Only seven states have active legal online casinos: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia.
Many states are grappling with the issue of online casino gaming. In some cases, an online casino provides casino-style gaming such as slots games, table games, and even poker.
States have been more cautious in legalizing online casinos, despite having launched online sports betting. Concerns over underage gaming and gambling addiction have been cited.
So far, no sweeping study on the impact of online legal betting has been issued that shows an increase in gambling addiction.
States are also concerned with the impact legal online casinos may have on brick-and-mortar casinos. However, in Michigan and Pennsylvania, which have had legal casinos for several years, no negative impact has been noted for retail casinos.
A few states have seen sweepstakes casino bans introduced but stalled. In Arkansas, Florida, Mississippi, and Maryland, legislators balked at banning such a sweeping activity that could impact prize programs and non-gambling sweepstakes contests.
SPGA Criticizes Montana Sweepstakes Casino Ban as “Vague”
At least one organization came out strongly against the decision by Montana.
The Social and Promotional Games Association (SPGA), which advocates for sweepstakes casinos across the U.S., sees the Montana ban as a far-reaching and unfortunate outcome.
“The SPGA strongly condemns the enactment of Senate Bill 555, which makes Montana the first state to ban online sweepstakes-style games, without even using the word sweepstakes”, the SGPA said in a written statement following the ban.
“This vague and sweeping law reclassifies legitimate, free-to-play promotional games as’ internet gambling’, ignoring the clear legal and operational distinctions between sweepstakes platforms and real-money online casinos. Under SB 555, even platforms with no purchase required and robust consumer safeguards could now face criminal penalties.”
A backdrop to this issue is the relationship tribal nations have in regard to gaming in Montana. In this state, brick-and-mortar casinos are only permitted to be operated by federally-recognized tribes.
The so-called sweepstakes casino apps threaten a monopoly that the Montana tribes have on casino games. The state also only has one option for sports betting: a state-operated sportsbook.
