Pre-Filed Louisiana Bill Puts Dual-Currency Sweepstakes Casinos on the Chopping Block

The list of states targeting or tightly regulating the popular sweepstakes casinos keeps on growing. On Friday, Representative Laurie Schlegel pre-filed House Bill 883 ahead of the start of legislative session on March 9th. Rep. Schlegel’s bill updates the definition of illegal online gambling to target the dual-currency model, and provide specific penalties for violators.

Many sweepstakes casino operators have already exited the state following a series of cease-and-desist letters. A legal opinion shared by Attorney General Liz Murrill stating that these games are “operating in violation of Louisiana law” added extra pressure on industry players.

Understanding the Provisions of HB883

House Bill 883 which was prefiled last February 27th, aims to redefine illegal gambling,provide provisions for penalties, outline enforcement rules and remedies. Interestingly, the bill doesn’t explicitly mention “sweepstakes games” or mention “sweepstakes casinos”. Instead, its language cites the “dual-currency system of payment” which is a popular model followed by most sweepstakes casino operators.

Specifically, the Schlegel’s bill defines illegal iGaming as:

Any game, contest, or promotion that is available on the internet or accessible on a mobile phone, computer terminal, or similar access device that utilizes a dual-currency system of payment allowing the player to exchange the currency for any prize or award, cash, or cash equivalents, or any chance to win any prize or award, cash, or cash equivalents, and simulates any form of gambling constitutes gambling by computer. (No. 13, B)

In addition, the bill also recommends specific penalties for violations. As indicated on lines No. 12-15, any person who access, play, or offer these kinds of games shall be fined not more than $100k, and “imprisoned with or without hard labor, for not more than five years, or both” 

The bill’s goal is to stop the operations of illegal gambling, and plug the “sweepstakes loophole”. If these gaming platforms look and operate like online casino gambling, regardless of the “no-purchase requirement”, then it should be banned unless licensed.

What Are the Immediate Implications for Operators and the Broader Industry

Although the state’s legislative session does not begin until March 9, the impact of Schlegel’s bill is already being felt.

• A de facto market closure. Social and sweepstakes casinos built on the dual-currency model would geoblock Louisiana, or revamp their business models to remain operational.

• Higher enforcement risk. Attorney General Murrill has already stated last year that sweepstakes casinos games are illegal under state laws. Under the current language, violators could face up to $100k in fines, up to five years imprisonment, and potentially asset seizures, ontop of consumer protection policies.

Since it’s a prefiled bill, its language and provisions may still change while waiting for its formal committee hearing. And during a committee hearing, members can recommend amendments, substitute, or even rewrite some parts of the bill before an official vote.

REFERENCES

• HB883