Sweepstakes casinos have become the unlikely benefactor of the broader online shift that has taken place in the iGaming world over the last 20 years. It was only a matter of time before traditional games like slots and roulette made their way online, and they have done so with great success. However, before the rise of online sweepstakes casinos, there was little market for them in areas that do not allow gambling. They simply did not have the viability in these areas that they do thanks to online sweepstakes casinos.
How online casinos paved the way
In a paradoxical twist, the sheer volume of new online casinos laid the foundations for the rise of sweepstakes casinos. Online casinos pioneered how people play, providing many fresh platforms to use. However, sweepstakes casinos came into play for casino gamers who wanted to explore something with a different vibe. Sweepstakes sites don’t put their whole emphasis on monetary deposits, winning and losses.
Sweepstakes casinos are not the only niche area of casino gaming that has managed to get a hold on the market. Sites that accept alternative payment methods have also made a name for themselves, such as providers that accept Bitcoin. Sweepstakes casinos are a different idea altogether, as they use virtual currencies that are only viable on their site or app.
Cryptocurrency has many different use cases and is increasingly considered part of a broader, diversified investment portfolio. Its rise as an alternative casino payment option has opened the doors to other brands that offer different ways to play. While they fall under a different legal remit, they share a similarity as they are genuinely different ways to play.
Understanding the legality of sweepstakes
Sweepstakes casinos are not regulated in the same way as traditional casinos as they do not offer a real-money outlet alongside the casino gaming experience. This means they do not have the same tax requirements either.
Large parts of the US and Canada have both gone through significant changes in their approach to online gambling so far this decade. Ultimately, this has enabled numerous new online gambling providers to set up shop across many states and provinces where it used to be illegal.
As the number of regions where gambling is forbidden continues to grow smaller, sweepstakes casinos are still going strong by offering their services in populous states like California and Texas, which have so far batted away any potential talk of legalizing online betting.
There are 11 states that have no version of online gambling at all, but Texas and California are key states when it comes to sweepstakes casinos due to the sheer number of people who live in each state. There have been recent suggestions though that Texas could be putting this to a vote again, which could change the landscape of sweepstakes and how viable they are in the US.
Skirting the grey area
Unlike online casinos, sweepstakes casinos don’t necessarily profit every time customers lose their hand or their spin at a traditional game. However, sweepstakes still need to be able to make money from their platforms, they just need to be careful that they are not doing so in a way that would constitute gambling.
It’s a tightrope because sweepstakes coins can be bought, and a monetary transaction is involved. Theoretically, gamers can still buy large amounts of coins or in-game currencies and use them to gamble. From a legal perspective, these coins do not have parity with the dollar, but some of them can be exchanged for prizes, including cash rewards.
Sweepstakes need a way to generate profit; otherwise, they’re not a business model that makes sense. They do this by selling coin packages, in return, they offer prizes. Coins can also be obtained for free by gamers who follow them on social media or interact with their site or promotions, simply logging in or requesting them by mail. They also offer commercial space for a fee via their social media channels and home page.
Final thoughts
Understandably, this has resulted in a debate between gamers who operate on either side of the fence. Some casino gamers argue that there’s clearly a connection between spending money at a sweepstakes and gambling it at a traditional casino.
While this might be a topic that comes under greater scrutiny in the future, the line has still been drawn in the sand for now, and sweepstakes can enjoy freedom as gaming platforms rather than gambling platforms.
It’ll be interesting to see how sweepstakes casinos change their business models if gambling becomes legal across the US. There will always be a market for casino gamers who would rather play for the enjoyment of the game and its mechanics than bet on each round.
However, if major states in the US embrace traditional casinos and these casinos start to eat into sweepstakes’ market share, this will be the acid test to see if sweepstakes have longevity in the market. Obviously, if there are changes to the law, it could accelerate any potential decline. For now, sweepstakes casinos have been able to plant their flag in the ground and become a viable part of this multibillion-dollar market.