Swept away
Sweepstakes debate heats up as the industry takes sides.
Star Entertainment retains its license, hit with A$15m fine.
New report torpedoes claims gaming harmful to NJ economy.
Flutter’s Sportsbet suspends novelty betting.
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Sweepstake debate rages on
Got you in my sights: The backlash against social gaming casinos and sweepstakes operators is building in the US, with influential tribal figures signaling their opposition and lawsuits stacking up against some of the biggest names.
“If the Vampire Squid called Sweepstakes Gambling insists on sticking its blood funnel into California, we will chop it off,” wrote Victor Rocha, conference chair at the National Indian Gaming Association, on X.
“The message I got was, ‘We’re going to keep doing it, so do something if you can.’ Challenge accepted.”
Having seen off sports betting in the Golden State for a few more years at least, Rocha is gunning for ostensibly free-to-play social casinos that often offer in-game virtual tokens.
Typically, sweepstakes casinos grant purchasers free entries, which are offered in the form of sweepstakes coins.
The American Gaming Association believes the model is being abused to create online casinos without the usual regulatory standards and obligations.
Be with you everywhere: Sweepstakes chatter was inescapable at the recent G2E in Las Vegas, with leading figures from the gambling world and senior regulatory notables chewing over the debate.
Flutter Entertainment CEO Peter Jackson made reference in his keynote speech to how sweepstakes were “pushing the envelope” and should “cross the Rubicon” towards being regulated.
During one panel, John Lessnau, criminal investigations manager at the Michigan Gaming Control Board, explained where many regulators draw the line.
He said sweepstakes that promote a business would get a pass. “Like McDonald’s and the Monopoly game, it’s designed to sell burgers, fries, milkshakes. Take Monopoly away, McDonald’s doesn’t go out of business,” he said.
But firms whose entire business model is sweepstakes and social gaming are in the gambling business, he argued, and would be the subject of enforcement action.
Michigan has chased away several operators, including one of the most prominent sweepstakes operators, Virtual Gaming Worlds (VGW).
Just an illusion: On Tuesday, VGW became the subject of several lawsuits claiming it offers unlicensed internet casino gambling, with two more pending cases in Boston, Massachusetts, which allege the “free method of entry” touted is illusory.
Gambling lawyer Daniel Wallach claimed that in the court filings VGW “often arbitrarily rejects submissions of mailed requests” for free sweeps coins, “regularly bans users” who submit such requests and changed its T&Cs to make it easier to refuse free entries.
Although VGW is an Australian business, Wallach noted the audited financials reveal the majority of VGW’s customers are based in North America. However, the company’s annual results are opaque as to the exact amount of revenue it is generating.
VGW is facing a class action in the state of Georgia, and has also run into regulatory trouble in Delaware and Connecticut.
Global Poker, a popular VGW product, allows the purchase of virtual tokens called Gold Coins, and in a separate part of the game players can enter sweepstakes with Sweeps Coins and can redeem winnings for real prizes.
Token up arms: The sweepstakes sector itself is mobilizing, with the recent creation of an industry lobby group designed to push back on scrutiny from traditional gambling firms irked by the encroachment.
The Social and Promotional Gaming Association was launched last month to advocate for responsible practices and consumer protections within the social and promotional gaming sector.
Founding members include Blazesoft, FSG Digital and Gold Coin Group (although, notably, not VGW).
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Have a say: Nick Rust, the chair of the UK Gambling Commission’s advisory group on industry matters, the Industry Forum, has issued an invitation via LinkedIn for those wishing to suggest issues that can be discussed at the next meeting on October 25.
“If you have any views on these matters, or suggestions for other issues you would like us to cover at future meetings, please do get in touch with me or any of the members of the Forum,” he wrote.
Cross-border cooperation: The authorities in China and Cambodia are strengthening their cooperation in limiting cross-border crime, particularly online gambling and cyber scams. More than 1,200 suspects in online gambling and cybercrimes have been jointly repatriated in the first six months of 2024, according to Inside Asian Gaming.
Italy’s media and communications regulator is introducing a new mandatory age check for adult content, which will require gambling operators to verify punters are old enough to bet using data pulled from the country’s national ID system.
Australia’s High Court has ordered SkyCity Entertainment to pay an extra A$10.3m ($6.9m) (at least) in casino tax following a drawn-out legal battle with the Treasurer of South Australia.
The case concerned the treatment of tax on customer loyalty points used in gaming machines, and could result in a further penalty of A$25.3m subject to a Supreme Court ruling.
Staying with Australia, Crown Resorts has been found to have failed to stop more than 200 self-excluded gamblers from placing bets at the group’s top Melbourne casino, resulting in a A$2m fine from the Victorian Gambling and Casino Control Commission.
The breaches were uncovered as part of ongoing monitoring of Crown’s operations by regulators, who may yet still yank the troubled casino’s license.
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Star ascent
Skin of their teeth: Star Entertainment saw its shares gain nearly 15% in early trading in Sydney after the New South Wales Independent Casino Commission ruled the casino operator could keep its operating license, even as it was handed a A$15m ($10m) penalty for various compliance breaches.
The company will now be able to keep open the doors at its Sydney operation.
However, alongside the fine it will also see the property remain under the supervision of a government-appointed manager for the foreseeable future.
The regulator has also demanded constant updates on the casino’s financial progress.
Last warning: NICC chief commissioner Philip Crawford told a press conference he was “hopeful and optimistic” the company would be able to get back on track and eventually take full control of its license in time.
“We’ve noted a significant change and improvement in the dialogue between the regulator and the casino post-Bell and particularly since the appointment of Steven McCann as CEO,” Crawford said.
“If Star Sydney fails, the group will fail.”
New Jersey takedown
Not so bad: A top industry lobby group has poured cold water on a report by economic consultants NERA, which suggested iGaming was harmful to the New Jersey economy.
The iDevelopment and Economic Association (iDEA Growth) said the study, published in late 2023, was “based on flawed and limited assumptions and analysis” and “severely underestimates” the financial benefits online gaming brings.
So NERA and yet so far: The NERA report claimed the $2.4bn wagered by New Jersey consumers cost the state around $180m in lost economic output, citing low wages paid by online firms.
The response by Meister Economic Consulting, Victor-Strategies and Regulus Partners noted that NERA limited its wage data information to just two licensed operators over three years, a small sample compared to the size and variety of the market.
iDEA’s report also evidences how iGaming does not cannibalize revenue from brick-and-mortar casinos or other entertainment sectors, as was claimed.
Novelty rock
It’s shutdown: Flutter Entertainment’s Sportsbet brand in Australia has suspended all betting on novelty markets such as the outcomes of reality TV series and those based on celebrity gossip, according to research undertaken by The Guardian.
The paper said, according to its own monitoring, such bets have been shut down for at least three weeks.
We’ll be back after the break: Sportsbet offered the paper a statement that suggested the markets might return at an unspecified date. “These markets may become available soon,” the company said.
The pulling of novelty bets comes after the South Australian liquor and gambling commission confirmed it is investigating Sportsbet but did not disclose the reason.
“Matters involving this business are currently under consideration and we are unable to comment at this stage,” a spokesperson told the paper.
Murphy’s law: Meanwhile, the Australian Greens party has submitted a bill to the senate calling for a ban on all gambling ads in the country across TV, radio, print and online.
According to a statement, the move was prompted by “continued delays by the government” on introducing the total ban as recommended in the Murphy report.
Senator Sarah Hanson-Young, the Greens spokesperson for communications, said: “Time is up and the public is sick of the excuses and the delays.”
“The government clearly doesn’t have the guts to stand up to the bookies and ban gambling ads so, today, the Greens will,” she added.
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POGO arrest
Kingpin: The Philippine authorities have arrested Chinese national and alleged POGO kingpin Lyu Dong – in what the country’s Presidential Anti-Organized Crime Commission (PAOCC) called a major operation – on charges of managing illegal gaming, according to the China South Morning Post.
“He is who we can say is the ‘kingpin’ of the POGOs in our country,” PAOCC executive director Gilbert Cruz told the paper in an interview on Friday..
Bet the farm: The paper reported that Dong arrived in the Philippines in 2016 and proceeded to establish several Philippine offshore gaming operations (POGOs) around Luzon island, which the PAOCC report on his arrest described as “a network of scam farms.”
Dong – real name Lin Xinhuan – allegedly has ties to the POGO firms Lucky South 99 in Porac, Pampanga, and Hongsheng Gaming Technology, later renamed Zun Yuan Technology, in the town of Bamban in Tarlac.
The last has been linked with disgraced mayor of Bamban, Alice Leal Guo.
She fled the country in July after a warrant for her arrest was issued and was later detained by the Indonesian authorities.
A subsequent Al Jazeera documentary claimed she was a Chinese state security agent.
Cover up: Cruz said it was possible Dong might have been the individual that Guo refused to name as the mastermind of POGO operations during previous Senate hearings. He added that Dong might be “a source of fear, or someone Guo is trying to cover up.”
The South China Morning Post said that local officials believe Dong’s capture could provide crucial insights into the operation of illegal POGOs and expose those who facilitated their widespread presence throughout the country.
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Events calendar
Event highlight: The 2024 Gaming in Germany Conference, which is being held on Tuesday, November 5, 2024 at the five-star Hotel Adlon Kempinski in Berlin, has announced a raft of new speakers. These include Christian Heins, director iGaming at Tipico; Stanisław Szostak, CEO of Astral Forest; Britt Boeskov, non-executive director at Mindway AI; and Annika Lindberg, psychologist and trustee at Gordon Moody.
Oct 21-24: World Lottery Summit, Paris
Oct 21-24: IAGR/IMGL joint conference, Rome
Nov 5: Gaming in Germany, Berlin
Dec 2-4: Thai Entertainment Complex Summit, Bangkok
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