Tennessee’s Attorney General, Jonathan Skrmetti, has taken significant action against the state’s social casinos by issuing a cease-and-desist order to 40 online sweepstakes casinos. This decision, made on December 29, 2023, asserts that these casinos have been operating without the necessary licenses for gaming activities. While Tennessee has not implemented a complete ban on these platforms, this latest measure effectively undermines the majority of their operations.
Regulatory Challenges in Social Gambling
Social casinos have long exploited the “sweepstakes” model, which critics argue allows them to circumvent established gaming laws. Many players engage with these platforms with the expectation of winning real money, a reality that becomes evident when cashing out supported currencies. A study conducted by the American Gaming Association highlights that most players are motivated by the potential for monetary gain, contradicting the claims made by social casinos that their operations are not subject to gaming regulations.
The cease-and-desist notice from Skrmetti’s office specifically targets 40 platforms that have been operating in Tennessee without proper gaming licenses. Although these companies contend that their sweepstakes are exempt from traditional gaming laws, this argument is increasingly being challenged by state regulators and public prosecutors.
Critics assert that the dual-use currency model employed by social casinos acts as a gateway for introducing casino-style games to the general public, all while lacking the consumer protections typically associated with licensed casinos. This has raised concerns about fairness and transparency in an industry that operates in a gray area of the law.
Response from the Social Casino Sector
In defense of their operations, the social casino sector, represented by the Social Gaming Leadership Alliance (SGLA), argues that their business model has historical precedent. Nonetheless, Skrmetti remains unconvinced, stating, “The only thing you can be sure about with an online sweepstakes casino is that it’s going to take your money. They work hard to make these sweepstakes casinos look legitimate, but at the end of the day, they are not. They avoid any oversight that could ensure honesty or fairness. Our Office was glad to chase these shady operations out of Tennessee and will keep working to protect Tennesseans from illegal gambling.”
The cease-and-desist order affects a range of platforms, including well-known names such as WOW Vegas, High 5 Casino, Global Poker, and Zula Casino. The move reflects a growing trend in the United States, as states like Indiana are also proposing legislation aimed at outlawing similar sweepstakes casinos, indicating a broader crackdown on this segment of the gaming industry.
As regulatory scrutiny intensifies, the future of social casinos in Tennessee and potentially across the nation hangs in the balance, with operators facing increasing pressure to comply with established gaming laws.
