New Jersey Takes First Step to Ban Sweepstakes Gaming

• A New Jersey sweepstakes banning bill has been approved in its first committee stop
• The bill bans dual-currency sweepstakes games in the Garden State
• Sweepstakes not free to the participant is ancillary to the purchase of food or non-alcoholic beverages

New Jersey is taking a long, hard look at potentially banning dual-currency sweepstakes games.

New Jersey Assemblyman Clinton Calabrese’s (D-36) bill, A5447, aims  to ban the sweepstakes model of gambling in the Garden State. Under the legislation, sweepstakes are defined as “promotional, advertising, or marketing event, contest, or game, whether played online or in-person, in which something of value, such as a prize or prize equivalent, is awarded, either directly or indirectly through means such as a dual currency system of payment that allows a participant to exchange the currency for a prize or prize equivalent.”

The legislation, however, allows sweepstakes in which participants receive entry through the purchase of food or non-alcoholic beverages.

Approved in Committee

The New Jersey Assembly Tourism, Gaming and the Arts Committee unanimously approved the bill last week. It has been referred to the Assembly Consumer Affairs Committee.

Calabrese’s bill prohibits sweepstakes gaming that determines winners based on the results of any sports event or contest or the performances of a team or athlete in a competition, “unless the sole and exclusive method of entry to participate in the sweepstakes is at no cost to all participants.”

This methodology would prohibit sweepstakes gaming companies from allowing users to buy “sweepstakes coins” to effectively use for wagers on sports.

The legislation also sets firm fines and civil penalties for operators offering unlawful gambling operations in the state. A first offense will result in a fine of $100,000, while a fine of $250,000 will be assessed for every subsequent offense.

Additionally, for each cease-and-desist order ignored by an operator, regulators will be able to assess a $25,000 fine for each violation.

Change in Opinion for Bill Author

It’s been an interesting journey for Calabrese, who actually introduced a pro-sweepstakes bill earlier in the year.

Calabrese introduced bill A5196 in January, which designated sweepstakes casinos as iGaming and required licensure, oversight, and taxation for sweepstakes operators in the state. It was one of the first bills introduced in the country to regulate the form of online gaming.

Under the legislation, sweepstakes operators would have to be licensed and partner with a casino as would any other iGaming operator.

“This includes the conduct of background checks for employees, the prohibition on accepting wagers from persons under the age of 21 and the required use of age verification tools, the payment of licensing and permitting fees, and the payment of taxes on all gross internet gaming revenues,” according to the bill.

Calabrese eventually withdrew the bill from consideration in April.