Indiana Debates Taking Action On Sweepstakes Casinos

Following in the footsteps of over a dozen other states, Indiana is moving to shut the door on the multi-billion-dollar sweepstakes casino industry.

The Indiana House Public Policy Committee held a hearing on House Bill 1052 last week, with debates centered on whether to ban or regulate online sweepstakes casinos.

Industry representatives argued that regulation would protect consumers and generate tax revenue. However, the Indiana Gaming Commission, represented by the agency liaison Nate Friend at the hearing, maintained that the unregulated platforms operate without consumer protections and should be prohibited entirely.

“These sweepstakes casinos are problematic for a number of reasons,” Friend said. “They are essentially offering a form of gambling with no regulation, licensing, or taxation. In addition, while consumers can play for free, they can also spend real money on the chance to win cash and prizes through casino style gameplay, regardless of the monetary aspect, consumers are participating in these activities without the protections that regulated gambling offers, such as self-exclusion programs, independent product testing to ensure fairness, robust fraud detection and age verification, financial and background checks on operators.”

Industry advocates warn ban could backfire

Industry advocates who testified included Sean Ostrow of the Social Gaming Leadership Alliance. He argued that if HB 1052 were passed, “I think the outcome is pretty predictable. The law-abiding operators are going to leave the state.”

He added that the “bad operators” will “continue to prey on unsuspecting Indiana consumers.”

Ostrow also claimed that approximately 200,000 Indiana adults currently play online sweepstakes games.

“We would just ask that you consider regulation,” Ostrow said. “You know, we think a ban at this point is premature, counterproductive.”

State Rep. Jim Lucas also advocated for regulation instead of an outright ban: “Sweepstakes have operated legally for over a decade, serve hundreds of thousands of Hoosiers, and should be regulated rather than prohibited.”

State Rep. Steve Bartels was in agreement, saying the move to ban is a “knee-jerk reaction based on potential competition with our own state agencies.”

Proposed penalties among the toughest in the nation

Introduced in early December by Reps. Ethan Manning, Peggy Mayfield, and Justin Moed, HB 1052 defines sweepstakes games as online platforms using dual-currency systems that allow players to exchange money for cash prizes while simulating casino-style gaming, including slots, poker, and sports wagering.

“Indiana is not the first to take action on this issue, and will not be the last,” Friend said. “This is a consumer protection issue that states across the country are working to solve by whatever means are available to them.”

Friend also noted that some online sweepstakes casinos allow users as young as 18 to play, while the state legal gambling age is 21.

Under the proposed legislation, operators that offer online sweepstakes would be punished with a $100,000 civil penalty per violation, which is the highest monetary penalty among the other states that have already imposed bans. In addition, operators would face Level 6 felony charges carrying six months to 2.5 years in jail.

National sweepstakes crackdown continues

Nine states have bans in place and several others have issued cease-and-desist orders or blocked operator access. A ban in California went into effect this month while New York’s prohibition was enacted last month.

Indiana’s state legislature is scheduled to adjourn on Feb. 27 so the clock is ticking for lawmakers who support a ban.