It is customary to roundup major events and look to the next 12 months in end-of-year articles. But the furore around social and sweepstake casinos, and the outrage felt by certain industry stakeholders, means that those arguments will continue to create noise in 2025.
However, they point to broader, albeit regular, disputes that appear when historic stakeholders and newish companies work in a similar or adjacent sector. Indeed, they would likely surface whether it were sweepstakes or other specialized companies that gained too much exposure according to the long-established operators briefing against them.
Competition is part and parcel of igaming, or any other commercial sector, however the recent high profile social casino and sweepstakes companies have experienced has in fact long been in the making. The tension between them and tribal and casino stakeholders such as Light & Wonder is reaching fever pitch in 2024, but the largest sweeps companies have been in the market for at least a decade.
Igaming Focus has alluded to this aspect of the debate in previous columns and articles, but with the animosity – coming mainly from the ‘traditional’ operators – reaching somewhat surreal levels, CDC Gaming wanted to find out how social and sweepstakes companies viewed the issue.
Not open to competition
The Social and Promotional Gaming Association is the recently-created trade body that promotes and advocates for the industry. Asked why the tribes and other stakeholders were going after its members so aggressively, it said: “It’s simple: They don’t like competition. For example, Howard Glaser [head of government affairs and legislative counsel)] of Light & Wonder is a leading critic of social sweeps. Why? Probably because Light & Wonder makes nearly $800m in annual revenue from their social casino brands – brands that are threatened by the rise of social sweeps.”
The trade group added that critics from the gambling industry like the American Gaming Association “aren’t shy about their agenda. […] By and large, criticism of social sweeps is driven by nakedly anti-competitive motivations”. Such motives aren’t limited to AGA members or the U.S. market, the only difference, as shown by the French lottery giant Française des Jeux, is that some companies use more discreet tactics to lobby for their corporate aims.
No impact
The SPGA also pointed to recent research by Eilers & Krejcik Gaming and Macquarie that suggests social sweeps sites don’t compete with traditional real-money casinos.
As part of its study, Eilers & Krejcik compared data from six states that have regulated online casino and, focusing on Michigan, it found that from January to August 2024 the state posted “the second worst year-on-year online casino growth in these markets since the exit of social sweepstakes casinos (an average of 24.8%)”.
The timeline of the study is deliberate. Virtual Gaming World, very likely the largest sweep operator in the sector, exited the state in December 2023 and Eilers & Krejcik commented that “if sweepstakes social casinos had a material impact on the state’s online casino market, one would expect the removal of those products to have had a positive impact on Michigan’s year-on-year figure, helping to raise it above that same figure for other states”.
As this reporter noted just after the U.S. elections, the SPGA’s Chris Grove is a partner at Eilers & Krejcik and investor in a number of social and fantasy betting companies, but, and this is important, he also discloses all his roles and portfolio activities on his LinkedIn profile.
The potential arrival of major trading platforms like Robinhood, Kalshi and others into the online sports betting space, as usual, caveats and (major) reservations apply, also means it’s just a matter of time before those groups “become the focus of criticism from legacy gambling stakeholders” if and when they enter the space. The SPGA added that “social sweeps have existed for a decade (and) anyone who is seen as a competitive threat will get their turn.”
Reiterating the point that “the social sweeps category is a small fraction of the size of traditional online gambling in the U.S.”, the SPGA said “consumers have embraced the social sweeps product because it provides a fun and engaging experience without the pressure or risk of traditional gambling games”.
Can gambling ever be enjoyable?
So much that is written about gambling is so gloomy that it leads one to wonder whether sports betting and playing at a casino can ever be truly enjoyed. Of course, one reality is that that is just the case. Millions of players enjoy a flutter on game days or a few rounds of blackjack and although most of them lose, they have had a good time and go home content. Some don’t however and develop problem gambling habits and addictions, which the industry must do its utmost to protect.
In this context, The Economist’s recent cover story praising sports betting, amid much gloom and criticism in the rest of the magazine, made the point that “the gambling frenzy is mostly about people being free to enjoy themselves”. The argument resonated with this reporter and the magazine also noted that sports bettors tend to be high earners, as opposed to lottery players. The implication being that low income households spend larger proportions of their budgets on lottery products than OSB customers.
In any case, and for what it’s worth, enjoying sports betting responsibly is what the industry should be about, while doing all it can to safeguard the most vulnerable. Still, we’re willing to wager we won’t see many more such articles in 2025. (Very funny, Ed).
