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Maryland legislation (SB 860/HB 1140) seeking to ban online sweepstakes gaming advances in Senate with a 13-0 vote, while House committee holds hearings.
Industry representatives argue sweepstakes are already legal under Maryland Commercial Law Code Section 13-305 and operate similar to promotional contests run by mainstream companies.
The broadly written legislation could unintentionally affect legitimate promotional programs while failing to address actual illegal gambling operations.
Legislation aiming to ban online sweepstakes gaming in Maryland is advancing through the state legislature, but industry representatives and legal experts warn the bills could harm legitimate businesses operating under established sweepstakes laws while creating unintended consequences for other companies.
Senate Bill 860, sponsored by Sen. Paul Corderman, passed unanimously (13-0) in the Senate Budget and Taxation Committee last week, while its companion, House Bill 1140, introduced by Delegate Eric Ebersole, underwent hearings in the House Ways and Means Committee on Tuesday without a vote.
The legislation seeks to prohibit "operating, conducting, or promoting online sweepstakes games" that use a dual-currency system where players can exchange virtual currency for prizes, cash, or cash equivalents. Violations would carry penalties of $10,000 to $100,000 in fines and up to three years imprisonment.
During testimony before the House committee, attorney Jeff Ifrah, representing the Social and Promotional Games Association (SPGA), argued that sweepstakes platforms operate legally under Maryland Commercial Law Code Section 13-305, which governs promotional contests.
"This is a bill that seeks to make something that's legal in Maryland illegal," Ifrah testified. "It's not just simply a bill that seeks to reiterate that illegal casino gambling should remain illegal."
Ifrah and other industry representatives point out that sweepstakes casinos offer free-to-play options and use a dual-currency model similar to promotional contests run by mainstream companies like Starbucks and McDonald's. Players can receive free play opportunities while having the option to purchase virtual currency to enhance their experience.
"VGW uses sweepstakes promotions the same way that McDonald's and Microsoft do: as a marketing tool where players never pay for a chance to win," said Josh White, representing Australian-based sweepstakes operator VGW. "But this bill is so broad... and based on misconceptions that would eliminate a well-regulated and legal form of digital entertainment."
Critics of the legislation argue its language is overly broad and could potentially affect legitimate promotional programs offered by mainstream companies.
Ifrah noted that Starbucks' rewards program, which allows customers to earn points from purchases that can be redeemed for prizes, could technically fall under the bill's definition of banned activities since it uses a dual-currency system.
"They always say 'no purchase necessary,' but we all know that the more coffees you buy, the more tokens you get," he explained. "Starbucks does use dual currency, so Starbucks would become a crime and anyone who supported Starbucks would be considered to be committing a crime."
The legislation's potential reach prompted Delegate Jason Buckel to suggest a more targeted approach might be needed, perhaps focusing on "pure online gaming not tied to regular legal consumer activity."
The sweepstakes industry argues that regulation rather than prohibition would better serve Maryland residents and businesses.
"A better approach is regulation, not prohibition," said White, suggesting that players would be pushed toward unregulated offshore platforms if legitimate sweepstakes operators were banned.
Ifrah proposed that Maryland could instead require sweepstakes operators to register and pay fees to the state Lottery for proper oversight, maintaining consumer protections while acknowledging the legal status of these businesses.
Meanwhile, casino representatives like Brad Rifkin of Light & Wonder support the ban, arguing that sweepstakes sites are simply "a veil" for illicit gaming. "If it walks like a duck and quacks like a duck, it's a duck," Rifkin testified. "It's illicit gaming."
Several sweepstakes casinos have already preemptively exited the Maryland market in anticipation of the potential ban. McLuck, Hello Millions, Jackpota, Spree, and Mega Bonanza have all recently restricted access to Maryland users, joining at least 12 other states where such platforms have voluntarily withdrawn.
As Maryland's legislative session continues, the fate of online sweepstakes gaming remains uncertain. However, industry advocates maintain that lawmakers should recognize the distinction between legally operating sweepstakes platforms and truly illegal gambling operations before enacting legislation with potentially far-reaching consequences.