For over a decade, the online gaming market has experienced significant growth. Sports betting became main stream, mobile casinos expanded their reach beyond existing players and introduced an element of live dealers that provided users with the ability to engage in game play similar to that found in traditional brick and mortar casinos. A newer model for delivery of gaming products is now gaining traction. Online sweeps platforms have grown to such a degree that the greater gaming community is taking notice of them. Such platforms have historically been viewed by some members of the gaming community as a niche product. However, based upon data collected and tracked by sites like sweepspulse.com , it appears that the growth of these types of platforms will continue and may potentially provide a viable alternative for gaming companies looking to expand their offerings.
What Makes the Sweepstakes Model Different
Casino operations that run sweepstakes-style online casinos will be governed by an entirely different set of regulations than those operating other types of online casinos. Sweepstakes-style online casinos do not accept wagers on individual games. They use a two-tiered system of virtual currencies. Virtual coinage is given to players so they may participate in various activities. Then a second tier of virtual “sweepstakes” currency is available through either participating in the activities to generate the sweepstakes currency, or players can purchase the sweepstakes currency as well. The sweepstakes currency earned by the player can then be redeemed for prizes including cash. However, the method in which players’ sweepstakes currency is entered to win prizes is considered promotional and thus is not considered betting.
This differentiation is very important from a regulatory perspective. To be able to operate in the United States as an internet-based casino operator you must first receive a gaming license from the State for each state in which you wish to offer your services. Currently, only a handful of states have passed laws allowing licensed online casino offerings. On the other hand, internet based sweepstakes platforms can operate throughout most of the United States because they fall under sweepstakes/promotional laws rather than gaming laws.
Therefore, we now have the option of creating an additional platform category, one that provides over 200 million adults in the United States, access to online casino entertainment. Approximately 30-40 million adults reside in states where licensed online casino play has been permitted.
Sweepstakes vs Traditional Online Casinos: A Direct Comparison
Factor | Sweepstakes Platforms | Traditional Online Casinos |
|---|---|---|
US State Availability | 45+ states | 6 licensed states |
Real-Money Wagering | Not required | Yes, deposit needed |
Regulatory Hurdles | Low | High |
Cost to Start | Free entry available | Minimum deposit required |
Prize Redemption | Via sweepstakes entries | Direct cash withdrawals |
Audience Reach | Broad, includes non-gamblers | Gambling-focused users |
Challenges the Sector Still Needs to Address
Some issues are in fact there. In conjunction with many positive elements relating to sweepstakes casino-style games, the presence of regulatory uncertainty, consumer mistrust, and other concerns are among some of the challenges associated with this model.
The Regulatory Uncertainty Obstacle
Although sweepstakes have been reviewed by both courts and attorneys general, that does not ensure their models will not be altered. As an example, Washington has already expressed an opinion about this kind of activity and stated that sweepstakes models are either restricted or illegal. With continued growth of this industry and continued generation of large sums of money for companies operating sweepstakes models, it is very possible legislators from other jurisdictions could consider legislation regarding this activity.
The Consumer Trust Issue
The potential to create sufficient consumer confidence and institutional credibility to attract new players as well as retain current players will likely be an ongoing effort that will require a significant amount of money over a period of years.
Potential Challenges With Regard To This Type Of Sweepstakes Casino Model
Creating a timely and efficient method to redeem prizes to all user groups.
Creating a variety of quality games to compete against the vast number of different types of games available from licensed casino operations.
Balancing allowing players access to the various products you offer with being accountable for how those products are used by your customers.
Accounting for differences in complexity when providing payment processing for sweepstakes operators compared to payment processing for licensed casino operations
What the Next Five Years Could Look Like
The question now is where do you think sweepstakes platforms might position themselves by 2030? It is important to acknowledge that each possible outcome (good, bad or indifferent) could occur.
From a positive viewpoint, if the sweepstakes platform continues to grow, with additional investment in the area, the sweepstakes platform should become a part of everyday discussion about gaming in general. Additionally, through large media deals and better technological advancements in the field of sports, sweepstakes platforms are likely to become one of the top choices for millions of consumers looking for a casino-like experience that does not require opening a licensed online account.
At the opposite end of the spectrum, from a conservative standpoint, regulatory pressures in key states will slow down their expansion. Although those companies who have built solid sustainable businesses will continue to expand; they will lose much of the momentum associated with their rapid growth in the beginning stages of sweepstakes platforms due to increased compliance costs.
A Sector Worth Watching
Whether or not sweepstakes platforms will be the ultimate new way for people to play games depends on some issues still to be decided. However, there is no question that the concept has passed its “novelty” stage. The number of users has been demonstrated by statistics , the money invested in this format is substantial; and there are significant structural advantages to sweepstakes gaming versus traditional casino gaming formats in markets such as the United States which cannot simply disappear.
Sweepstakes gaming provides additional choices for gamblers (players) including increased game offerings and expanded access to gambling opportunities irrespective of their geographic location. Sweepstakes gaming also presents a fundamental paradigmatic shift regarding the structure of online entertainment, and the demographics to whom it may appeal. The combination of broadened accessibility, combined with an ongoing growth in quality of product makes sweepstakes gaming one of the most intriguing stories currently playing out within the gaming community, and certainly one that has many chapters left to be written.
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