Indiana Legislators Consider Ban Or Regulation Of Sweepstakes

Indiana lawmakers opened the new year with a basic, but increasingly urgent, question surrounding the sweepstakes model of gaming: Should the state ban them or regulate them? 

That debate dominated the House Public Policy Committee hearing on House Bill 1052, which would outlaw “sweepstakes games” that use a dual-currency model and mimic casino-style gambling. The bill would also create civil and criminal penalties for operators offering those games in Indiana.

The Indiana Gaming Commission told lawmakers that while sweepstakes casinos are widely used in the state, they are not currently breaking Indiana law.

“It’s nuanced, but we don’t think so, which is why we need this legislation,” said IGC General Counsel Natalie Huffman, according to SBC Americas. She said the multi-currency structure “allows it to operate outside of our current regulatory scheme,” and without a law change, the agency cannot issue cease-and-desist letters “in good faith.”

Huffman and IGC Legislative Liaison Nate Friend said the commission believes a ban is the best option. But some lawmakers pushed back, saying regulation should be considered before prohibition. Rep. Jim Lucas argued it would be unfair to ban an industry that is operating within the law, simply because the state hasn’t built a framework around it. 

“It’s incumbent upon us to find a way to make this work,” Lucas said. “I don’t think we should be in the business of picking winners and losers.”

License, please

Rep. Steve Bartels proposed an amendment that would shift the bill toward licensing and oversight rather than a ban. 

“We’re going to ban them without trying to regulate them first?” Bartels asked. “They’re not violating any laws, but maybe we need to regulate them.”

Industry officials made the same case in a press release from the Social Gaming Leadership Alliance (SGLA). The group said HB 1052 would “criminalize law-abiding businesses while doing little to stop illegal operators.” SGLA Managing Director Sean Ostrow said “hundreds of thousands of Hoosiers” play what the group calls “Social Plus games,” which are free to play with optional purchases and sweepstakes features. The Indiana Capital Chronicle reported Ostrow estimated about 200,000 Indiana players.

Representatives from sweepstakes companies told lawmakers they support state oversight and taxation instead of a ban. Dan Marks, chief financial officer of ARB Interactive, told the committee that if legitimate operators leave the state, players will move to offshore sites that don’t verify age, follow security protocols, or guarantee payouts. 

“Consumer demand will still remain,” Marks said. “Our players will simply drift to those offshore sites.”

Lloyd Melnick, chief growth officer at VGW, said Social Plus games have been around for years and give players a “fun, safe” experience. He warned that banning them would signal that Indiana is “not open to digital innovation and competition.”

But Rep. Ethan Manning, chair of the committee and a sponsor of HB 1052, said a ban is necessary unless lawmakers are ready to fully legalize online casino gaming.

“They’re not breaking any current laws,” Manning said, according to SBC Americas. “But if we don’t pass the prohibition, then we’re effectively saying we’re OK with the sweepstakes casinos continuing to operate as they are today, even though this legislature has been unable to pass iGaming and make that policy statement.”

Rep. Kyle Miller offered a separate amendment that would legalize iGaming statewide, arguing that would give the state a ready-made framework to regulate sweepstakes companies. Manning countered that if online casinos were legal, sweepstakes sites would likely fade on their own.

The committee did not vote on HB 1052 and is expected to take the issue up again in the coming weeks.