Ruddock Report: The Sweeps Sensation Could Spur Online Casino Legalization Action
The end of pandemic relief funding should also encourage states to pursue iCasino
5 min
Our monthly look at the online gambling landscape includes the current legal and regulatory landscape, prospective online casino and online poker states, and significant trends to watch.
“Sweepstakes casinos,” or social casinos with an additional sweepstakes layer, as their supporters call them, are all the rage. However, the tenuous legal footing sweepstakes companies rely on could significantly impact online casino efforts, either positively or negatively.
LEGAL ONLINE CASINO ONLINE POKER-ONLY
If sweeps are here to stay …
What will happen to sweepstakes sites? As in the MCU, numerous timelines could play out, but certain outcomes are more likely than others.
If sweepstakes casinos are here to stay, the industry has two options:
- Do nothing and cede the mobile casino space to sweepstakes operators — similar to how DFS companies came to rule the sports betting roost.
- Legalize online casinos in more states, compete toe-to-toe with sweepstakes sites (with substantial structural advantages), and offer patrons a one-stop shop for all their online gambling needs.
If legal and regulatory crackdowns are successful, online casino legalization advocates lose one of their best arguments: that “illegal” gambling is already happening right under the nose of the anti-legalization crowd. If there is a sweepstakes crackdown, it may not help online casino legalization.
Essentially, the presence of sweepstakes casinos, coupled with their success, can be a short-term asset or a long-term liability for licensed operators. The licensed industry will win if it uses sweepstakes sites to push for legalization. If it drags its feet or the argument doesn’t accelerate legalization efforts, it will lose.
You can find more of my thoughts on sweepstakes in this column.
The candidate list
The following is taken from Straight to the Point Consulting’s The Forecast, which includes fast analysis for each state. Below is an analysis of this month’s spotlight state: Colorado.
(You can contact me here if you’d like more information about The Forecast.)
| Online Casino Candidate List | |
| Likely: 50%+ | Possible: 25-49% | Possible, but unlikely: 10-24% | Unlikely: <10% | |
| SEVEN CONTENDERS | |
| Arkansas | – STTP FORECAST: Possible, but unlikely. |
| Indiana | – STTP FORECAST: Possible, but unlikely. |
| Iowa | – STTP FORECAST: Possible, but unlikely. |
| Louisiana | – STTP FORECAST: Possible, but unlikely. |
| New Hampshire | – STTP FORECAST: Possible. |
| New York | – STTP FORECAST: Possible. |
| Wyoming | – STTP FORECAST: Possible. |
| EIGHT HOPEFULS | |
| Arizona | – STTP FORECAST: Dark horse status. |
| SPOTLIGHT on Colorado | The Good: Staring down a possible $900 million budget deficit in 2025-26. The state is also looking to increase funding for water conversation projects. Colorado Budget Director Mark Ferrandino has indicated casino owners and existing sports betting operators are discussing iCasino. The Bad: Land-based casinos are performing well, with revenue above pre-pandemic levels. Tribes have sued the state over mobile sports betting, which could complicate other expansion talks. – STTP FORECAST: Unlikely. |
| Illinois | – STTP FORECAST: Unlikely. |
| Kentucky | – STTP FORECAST: Unlikely. |
| Maine | – STTP FORECAST: Unlikely. |
| Massachusetts | – STTP FORECAST: Unlikely. |
| North Carolina | – STTP FORECAST: Dark horse status. |
| Ohio | – STTP FORECAST: Unlikely. |
Candidate spotlight: Colorado
Colorado is the dictionary definition of a sleeper candidate, but there are several reasons to be bullish on the Silver State.
First and foremost, the state is facing a significant (as much as $900 million) budget deficit. Separately, it is trying to increase funding for its water conservation projects — a referendum to remove the $29 million cap on sports betting tax revenue earmarked for water projects is on the November ballot.
Second, potential iCasino stakeholders are largely on the same page.
However, Colorado’s two gaming tribes, the Southern Ute Indian and Ute Mountain Ute Tribes, have filed a lawsuit against Colorado Gov. Jared Polis and the director of the Colorado Division of Gaming, Christopher Schroder, claiming the 1995 compacts allow the tribes to offer “gaming activities and bet amounts that are identical to the activities and bet amounts that are authorized in the State of Colorado,” and that the state has unfairly blocked them from engaging in online sports betting. An online casino effort would have to find a compromise with the tribes around sports betting.
Third, Colorado has already proven it can quickly craft and pass online gambling legislation. On its first attempt in 2019, the legislature passed a mobile sports betting bill (that voters later authorized).
All that said, Colorado will need someone (a legislative leader or the governor) to step up and lead the charge. If that person emerges, Colorado’s chances could upgrade from unlikely (<10%) to possible (>50%).
Previous spotlight states:
Trends to watch
Trend #1: State budgets, the key to unlocking iCasino
We are four years post-pandemic, and the federal pandemic aid that states were receiving is drying up.
As Politico reported in August:
“School districts across the country received the largest infusion of federal cash ever to pull themselves out of the throes of the pandemic. But now that money is set to expire and districts are slashing jobs, increasing class sizes, and cutting programs to keep their schools afloat.
“Congress designed the aid — roughly $190 billion altogether — as a one-time distribution of cash primarily to tackle pandemic crises like learning loss, chronic absenteeism, and worsening mental health. That’s more than one-fifth of total U.S. K-12 education spending in 2022. Now, the last $122 billion runs out at the end of September.”
And it’s not just K-12 funding that will disappear. As Pew Research noted in February, “the federal government provided almost $53 billion in one-time funding for the child care industry” in three COVID relief packages, all of which will vanish.
Colorado, Louisiana, New York, and other candidate states face massive budget deficits. Conversely, some sports betting candidates, like South Carolina and Georgia, have surpluses, making legalization a more difficult sell to wary lawmakers.
Trend #2: Tribes’ measured reaction to West Flagler
Colorado tribes are citing the West Flagler case in their attempt to launch mobile sports betting. Still, across the country, tribal leaders are tempering expectations, cautioning that while the West Flagler case is a positive development, it did not open the proverbial floodgates.
“I know there’s a lot of excitement over this decision, and it was the right decision, but people think we’re going to start having a push for new initiative immediately [in California],” James Siva, chairman of the California Nations Indian Gaming Association, said in a June installment of the Indian Gaming Association’s “New Normal” webinar series. “Luckily, we have a CNIGA meeting coming up this week, and everyone realizes we’ll continue on the path we’ve been taking the last few years, moving carefully and methodically.
“This [the West Flagler decision] opens up some new avenues for us, but our timeline remains the same even with this decision.”
And as Ryan Butler tweeted from G2E:
“Court decisions that allowed the Seminole Tribe to offer statewide mobile sports betting in Florida ‘opens up space’ for more discussions for online sports betting and potentially iGaming with other tribes in other states, former NIGC chair and tribal gaming attorney Jonodev Chaudri said.
“Though these rulings opened up online gaming potential, the realities in states with many tribes such as California, Oklahoma, Arizona, Wisconsin (and others) make things complicated, Chaudhuri added; the tribes have different interests and negotiations that work for all are hard.”
