The lack of viable online gambling options in California has resulted in some operators attempting to circumvent existing legislation, resulting in action being taken by the Los Angeles City Attorney against several sweepstakes operators.
Current Californian gambling regulations prohibit commercial casino betting, sports betting, and online gambling operations. This has led to consumers exploring alternative options, including sweepstakes casinos, offshore casinos, and raffles sites.
As regulations only cover the operation of gambling sites, offshore operators can offer their services to Californians without breaking the law. Licensed offshore operators provide a secure way for players to enjoy their favorite casino games, but US regulators are not in a position to help consumers with complaints.
Similarly, international raffle sites can provide consumers with a fun and exciting way of winning a variety of prizes, including luxury goods, holidays, and cash. Players can buy tickets and enjoy instant win games or be entered into larger prize draws. (Source: realraffle.com)
Sweepstakes casinos have been operating in US states without licensed online gambling services, as it is argued that they are free to play and should not count as gambling. Sweepstakes casinos typically operate a dual-currency model with gold coins available to purchase and play with for fun, or sweepstakes coins, which can be traded for prizes.
Consumers can earn sweepstakes coins as a bonus for buying gold coins or in other ways, like completing certain actions, including following accounts on social media, creating an account, sharing content on social media, and interacting with site sponsors. Players who use sweepstakes coins to place bets can then trade winnings for prizes.
Because consumers are technically not charged for sweepstakes coins, it is not considered gambling by many, but the state of California is pursuing operators in what will be the first civil action by a government against sweepstakes casinos in the United States.
The lawsuit alleges that these operations violate the FAL (False Advertising Law) and UCL (Unfair Competition Law) and seeks an injunction to halt operations, restitution for all funds lost by California state residents, and civil penalties for each violation of up to $2,500 or $7,500 in the case of violations that involve vulnerable or senior citizens.
Because of the scale of operations, this case has the potential to run into billions of dollars in compensation if found guilty. Prosecutors allege that the operations are designed in the same way as online casinos, with the dual-currency model designed to avoid anti-gambling regulations.
The lawsuit also lists a number of partners, including Big Time Gaming, NetEnt, Evolution, and Red Tiger, with potential regulatory change under Assembly Bill 831 seeking to clarify the grey areas that these operations currently work under.
Other states are likely to be on alert regarding the outcome of this action, with sweepstakes casinos in the US facing an uncertain future if they are found guilty in California of the charges against them.
