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Assembly Bill 5447 would specifically ban sweepstakes casinos, which allow users to purchase virtual currency that can be redeemed for cash prizes.

The bill is sponsored by Rep. Clinton Calabrese, and follows an attempt earlier this year by the same lawmaker to regulate the emerging vertical, rather than ban it outright.

Unlike regulated online casinos, sweepstakes platforms operate under specific sweepstakes laws rather than traditional gambling regulations.

The bill would also impose new penalties for unlicensed gambling operators and practices. The Division of Consumer Affairs and the Division of Gaming Enforcement would be responsible for enforcing these provisions.

Sweepstakes sector responds

In response to the bill, the The Social and Promotional Games Association (SPGA) said it “firmly opposes Assembly Bill 5447, a reckless attempt to ban sweepstakes in New Jersey. This shortsighted legislation abandons the state’s progressive stance on gaming, directly contradicting the regulatory framework championed by Assemblyman Clinton Calabrese earlier this year — one that would ensure oversight, licensing, and taxation, bringing sweepstakes in line with other regulated gaming entities.

“New Jersey has led the way in gaming regulation — not followed. With innovative licensing frameworks for digital entertainment, the state sets the standard. This smart, forward-thinking approach should continue, not be replaced by outdated prohibition.

“We urge lawmakers to reject Assembly Bill 5447 and instead pursue the balanced regulatory approach previously introduced to protect consumers while allowing innovation to flourish in New Jersey’s dynamic gaming market.”

State-level responses to sweepstakes casinos

New Jersey’s bill reflects a broader nationwide effort to curb sweepstakes casinos. Several states have already taken steps to regulate or ban them, citing concerns over consumer protections and lost tax revenue.

A few examples include:

– Maryland: Senate Bill 860, currently under consideration, explicitly seeks to ban sweepstakes casinos within the state.

– Mississippi: In February, the Mississippi Senate voted unanimously to ban certain online gaming platforms, including sweepstakes casinos.

– Washington: The state has taken enforcement action against sweepstakes casinos in recent years, arguing that they constitute illegal gambling operations under state law.

– California: State officials have pursued legal action against sweepstakes casino operators. There is also an ongoing effort to have them banned in the state.

– Florida: Lawmakers are considering a bill that could effectively prohibit sweepstakes casinos in the state.

Challenges in regulating sweepstakes casinos

Despite mounting legislative and enforcement efforts, online sweepstakes casinos continue to operate in the US without state-by-state licensing.

Many of these platforms claim they comply with federal sweepstakes laws, which means they do not need to be licensed under traditional gambling regulations.

Attempts to shut down sweepstakes casinos have largely been left to private litigation and sporadic state regulatory actions. More than 20 private lawsuits have been filed against sweepstakes operators, but many cases have stalled in procedural disputes.

Courts have yet to reach definitive rulings on key issues such as arbitration agreements, jurisdictional questions, and the legal standing of plaintiffs.

The slow progress of litigation has allowed many sweepstakes casinos to continue operations without immediate consequences.

With multiple states pursuing bans and increased regulatory scrutiny, however, the legal landscape for sweepstakes casinos remains uncertain. New Jersey’s proposed bill signals a shift toward stricter enforcement, potentially influencing other states to follow suit.

However, the long-term effectiveness of these measures will likely depend on legal challenges and the ability of regulators to enforce market rules.