Governor Phil Murphy Signs Law Banning Sweepstakes Casinos in New Jersey

^{New Jersey Governor Murphy approved a law targeting sweepstakes gambling sites operating in New Jersey. (Photo: Kyle Mazza / ZUMA Press Wire via Alamy)}

New Jersey Governor Phil Murphy signed a bill on Friday, Aug. 15 that banned sweepstakes gambling, making the Garden State the latest state to crack down on the popular sites.

Bill A5447 sets a fine of $100,000 for the first offense of conducting unlawful gambling by operating a sweepstakes casino site, with a $250,000 fine for every additional offense.

Bill Sponsor Says New Legislation Clarifies ‘Legal Loopholes’ 

Sweepstakes casinos operate using a dual currency system, typically called “gold coins” and “sweeps coins.” Gold coins are virtual currency that cannot be exchanged for cash or prizes, and players can purchase them if they wish to have additional play, just like with social gaming apps. 

However, sweeps coins can be exchanged for rewards, often including cash. While players cannot directly purchase sweeps coins, they can earn them by logging in, participating in social media campaigns, writing to companies for free coins, or get them as a bonus for purchasing gold coins. 

It’s that last method that critics say make sweepstakes casinos essentially just another form of gambling, as they contend that players are typically paying for the sweeps coins, no matter how the sites may choose to frame those purchases. And while operators contend that the many ways of getting sweeps coins without making a purchase mean that their sites operate under sweepstakes law, a recent study commissioned by the American Gaming Association (AGA) found that 90 percent of users consider playing at sweepstakes casinos to be gambling.

That’s an opinion also shared by the sponsors of the New Jersey bill.

“New Jersey has a proud tradition of responsible gaming regulation that we don’t want to be undermined by bad actors seeking to exploit legal loopholes at the expense of customers,” State Sen. John Burzichelli (D-Salem) said, via the Press of Atlantic City. “This will ensure that our laws are clear, our penalties are stronger, and that we have the tools necessary to shut down illegal sweepstakes gambling operations before they can cause further harm.”

SGLA Pushes Back Against ‘Government Overreach’

The sweepstakes industry blasted the decision, calling it a “clear case of government overreach.”

“Lawmakers in New Jersey have completely ignored their own constituents and enacted a ban that voters oppose,” Jeff Duncan, executive director for the Social Gaming Leadership Alliance, said in a statement. “This law is a textbook example of government overreach that strips away entertainment choices from adults who should be free to make decisions about their own entertainment.”

Several state governments have disagreed with the arguments made by the sweepstakes industry. Lawmakers in Connecticut, Montana, and Nevada have all recently outlawed sweepstakes sites, while several other states have legislation under consideration to regulate or ban such casinos. 

However, the industry has had its victories as well. In Louisiana, Governor Jeff Landry chose to veto a bill that would have outlawed sweepstakes casinos, saying that existing laws were already sufficient to tackle unregulated gaming in the state.