Maryland bill targets sweepstakes casinos with proposed ban

February 6, 2025

Maryland is considering a bill that would ban sweepstakes casinos and impose stricter controls on companies involved in offshore markets. Senate Bill 860, sponsored by Senator Corderman, proposes the ban, with potential implementation starting July 1, 2025. This legislative effort follows increased opposition to sweepstakes casinos in 2024, including court challenges and regulatory scrutiny.

Key provisions of Senate Bill 860

The proposed law aims to ban any internet-based contest that mimics iGaming or sports betting and uses a dual currency system to distribute cash prizes. It also seeks to prevent financial institutions, payment processors, affiliates, and gaming content suppliers from supporting online sweepstakes operations.

The bill includes measures to ban the issuance or renewal of licenses to entities that accept revenue from blacklisted jurisdictions for money laundering by the Financial Action Task Force and countries designated as state sponsors of terrorism by the U.S. government.

It also targets companies that derive revenue from jurisdictions where online casino gaming is illegal, potentially impacting the licencing of major European operators and suppliers with grey and black market exposure.

Parallel efforts to legalise iGaming in Maryland

The proposed sweepstakes ban accompanies a parallel effort to legalise iGaming in Maryland during the 2025 legislative session. However, this effort faces challenges, particularly regarding concerns about the cannibalisation of land-based revenue.

Senator Corderman introduced Senate Bill 860 as the Maryland Lottery and Gaming Control Agency (MLGCA) acknowledges its ongoing challenges in curbing unlicensed sweepstakes operators within the state. MLGCA Director John Martin has been working with lawmakers to develop strategies to tackle unregulated gambling activities.

Martin stated that regulators have collaborated with the state attorney general’s office in an effort to compel 11 offshore gambling sites and sweepstakes platforms to block access to Maryland residents. While these efforts have seen some success, several operators have disregarded cease-and-desist letters.

Martin noted that six sweepstakes operators informed the agency of their belief that they were operating legally and, therefore, would not block access to customers in Maryland.

Highlighting the scope of the problem, Martin wrote in a letter to the state House Ways and Means Committee, “The agency knows the market is much larger than the 11 known sites and sweepstakes operators and continues to pursue avenues to shut them down.” He also emphasised the nature of these illegal operations, stating, “Many online illegal gambling sites are offshore, and states must work with the federal government to stop illegal and unregulated gambling.”

Martin stressed that illegal gaming persists because “bad actors” are offering gaming opportunities that closely resemble legal, regulated gaming. To counter this, Martin also noted in his letter, “One benefit to legal, regulated gaming in Maryland is that growth of the legal market is increasingly attracting and retaining customers from the illegal and offshore operators.” He also highlighted the need to consider consumer protection measures, such as age verification and responsible gaming.

Martin said the MLGCA will continue to follow up with the Attorney General’s Office, stay in communication with other state gaming regulators, and potentially even receive federal assistance to block services from the illegal companies.

Current status of online casinos in Maryland

Real-money online casinos are not yet legal in Maryland, but alternatives exist in the form of social and sweepstakes casinos. These platforms allow players to engage in online casino games for free, with sweepstakes casinos offering the chance to win cash prizes.

Should bill SB0340 be approved by voters, legislation has been introduced to allow for a referendum on the November 2025 general election ballot to legalise online casinos in Maryland

How do other states regulate sweepstakes casinos?

Other states handle the regulation of sweepstakes casinos in various ways, ranging from explicit bans to allowing them under specific conditions.

• Banned States: Washington and Michigan have explicitly banned sweepstakes casinos. In October 2023, Michigan Attorney General Dana Nessel ordered Golden Hearts Games to shut down its operations in the state.

• Restricted States: Idaho doesn’t allow cash prizes to be won. Players can only use gold coins, which defeats the purpose of sweepstakes casinos. Nevada, Kentucky, New York, and Wyoming are also avoided by some sweepstakes casinos due to the fuzzy legal situation.

• States with Stricter Laws: Washington has stringent gambling laws and increased regulatory scrutiny, making it challenging for sweepstakes casinos to operate at all.

• States with Explicit Laws: Each state has its own regulations concerning sweepstakes and gambling. While some states have clear guidelines, others operate in a grey area where the legality of sweepstakes casinos is not explicitly defined.

• Licensing and Compliance: Some states require sweepstakes casinos to obtain specific licenses, while others have stringent operational rules to ensure compliance with state laws.

• Federal Regulations: Sweepstakes casinos generally operate under sweepstakes laws, which means that no purchase is necessary to enter or win.

Consumer protection or consumer choice?

Maryland’s proposed ban on sweepstakes casinos is part of a broader debate about the future of iGaming in the state. As local Lawmakers weigh the pros and cons, the decision will not only affect the state’s gambling landscape but may also influence how other states approach the regulation of emerging gaming platforms.

While some argue for the ban due to concerns about consumer protection and unfair competition with traditional casinos, others emphasise the potential loss of consumer choice and revenue opportunities. Ultimately, the outcome relies on balancing these competing interests and aligning with Maryland’s broader economic and regulatory goals.