【Rotten demo】-Maryland legislation to ban sweepstakes casinos advances

The Maryland Senate Budget and Taxation Committee unanimously approved SB 860 last week in a 13-0 vote, signalling strong bipartisan support for the measure.

The legislation, spearheaded by Sen. Paul D. Corderman, seeks to address what lawmakers see as a legal loophole that currently allows online sweepstakes gaming to operate without clear regulatory oversight.

A companion bill, HB 1140, introduced by Delegate Eric Ebersole, is currently under consideration in the House Ways and Means Committee. A hearing on the bill was scheduled for yesterday, and no updates on its status are available.

If enacted, both bills would outlaw online sweepstakes gaming across the state and empower the Maryland State Lottery and Gaming Control Commission to deny gaming licences to operators who engage in or profit from sweepstakes-based gaming.

The proposed law defines online sweepstakes games as those that use a dual-currency system, allowing players to purchase virtual currency — often labeled as sweepstakes coins — and use them to place bets on casino-style games or sports events.

Players can then exchange winnings for real cash or cash equivalents. This business model has gained traction in recent years as a workaround to traditional gambling regulations, leading to a growing crackdown by state governments.

Violators of the proposed law would face severe penalties. If the bill is passed, individuals or companies found operating online sweepstakes gaming in Maryland could be fined between $10,000 and $100,000 and face up to three years in prison.

The legislation aims to eliminate any ambiguity in the state’s stance on such games, making it clear that Maryland considers them a form of illegal gambling.

In response to SB 860’s introduction last month, the Social and Promotional Games Association said: “This hastily drafted legislation represents a dangerous overreach, threatening legitimate business practices across Maryland while attempting to dictate what games adults can play on their phones. 

“Sponsor Senator Corderman is increasing Maryland’s budget deficit and risking even more significant economic harm, all to the perceived benefit of entrenched, anti-competitive special interests.”

Maryland sweepstakes field shrinks

The crackdown on online sweepstakes gaming has already had an impact in Maryland, with several sweepstakes casinos exiting the market ahead of the anticipated ban.

McLuck and Hello Millions recently announced that they had added Maryland and West Virginia to their list of prohibited states, while three other platforms — Jackpota, Spree, and Mega Bonanza — ceased operations in Maryland on 21 February.

These brands have now restricted access to users in at least 12 states.

Maryland lawmakers have expressed concerns that sweepstakes casinos operate in a legal grey area, avoiding the stringent regulations and taxation imposed on traditional gambling establishments.

While conventional casinos and sports betting platforms in the state are subject to oversight by the Maryland State Lottery and Gaming Control Agency, sweepstakes-based models have, until now, largely evaded the same level of scrutiny.

If the legislation is signed into law, Maryland will join a growing list of states taking action against online sweepstakes gaming.

The bill follows similar regulatory moves in other jurisdictions that have sought to close reported loopholes that allow these games to function as de facto gambling operations.

The fate of the bill now rests with the House of Delegates. If approved, the legislation will move to Governor Wes Moore’s desk for final consideration.

If enacted, Maryland’s gaming laws would become among the strictest in the country regarding sweepstakes-based gambling, joining Mississippi, New York and other states that are reviewing similar legislation.