Whether it is sweepstakes in the U.S. or icasino regulation in France, lobbying will play a key role in determining the future shape of key verticals on both sides of the Atlantic.
The level of animosity and language used by some U.S. stakeholders opposed to sweepstakes operators and executives associated with the vertical has been strong (to say the least). Victor Rocha, editor of Pechanga.net and member of California’s Pechanga Band of Luiseno Indians, has never been one to mince his words, but even by his standards, his recent posts on Twitter/X are noteworthy. Whether the language used is really necessary is another matter.
The Social and Promotional Gaming Association (SPGA) is the trade body that represents a number of those companies. A spokesperson for the SPGA told CDC Gaming that its “members – and virtually all social casinos with sweepstakes prizes – operate within the bounds of qualified legal opinions issued by experienced gaming firms. They also operate within the rules and regulations set at the state level for sweepstakes promotions.”
In addition, beyond Rocha’s posts, it’s worth noting that much of the commentary around sweepstakes focuses on terms like ‘loopholes’ and ‘unlicensed’, rather than describing the activity as ‘illegal.’
And with regulated operators also offering gambling-adjacent products that are not licensed or regulated in every state or jurisdiction where they operate, “‘unlicensed’ or ‘unregulated’ should not be conflated with ‘illegal’”, the SPGA spokesperson added.
As mentioned last week, the SPGA hosted an online briefing to provide an overview of its members’ activities and will be issuing a code of conduct to articulate the consumer protection and responsible gambling measures of its members.
Lobbying by both sides is likely to go on for many more months. In the meantime, the SPGA added that it will continue providing “access to research and educational materials, or simply setting the record straight on the basic mechanics of sweepstakes. Unlike some of our critics, our purpose and agenda are both transparent.”
France icasino regulation
News that France has taken the first steps towards finally regulating its online casino market has been welcomed by igaming executives and is a major development in the evolution of one of Europe’s largest gambling markets.
This is because France is the last major western European market to not have regulated the vertical since it launched licensed online sports betting and poker in 2010. To an extent the development is also surprising and has happened much quicker than many industry observers thought it might.
But with new Prime Minister Michel Barnier seeking to raise revenues to address the country’s debt levels, maybe we shouldn’t be that surprised by the news.
Necessity and mothers of invention
This pressing need for revenues is driving the government’s thinking, according to a number of contacts CDC Gaming has spoken with, and is one of the reasons why it has opted to legislate for an open market environment from day one.
If passed, it would mean regulated icasino operators of all shapes and sizes would be able to work in the market as long as they meet compliance and licensing requirements. However, it goes against the express wishes of the country’s 200 land-based casinos, who have called for the vertical to be regulated in a setting that would tether online operators to physical casinos and give them a three-year exclusivity period before opening the market completely.
But of course, an open market also means a bigger market – and more tax revenues for the state. As politicians prepare to debate the measure, intense lobbying from all sides will be a major feature and will determine the regulations’ eventual framework.
U.S. parallels
‘What does this have to do with the U.S. market?’, regular readers of this column will ask; and with good reason. Well, money is what it comes down to.
After ‘looking under the bonnet’ of the country’s finances, France’s new government, much like the U.K. in fact, is finding out that there is an urgent need to raise funds and that the situation is even worse than anticipated.
One way to do this is by imposing tax hikes on French gambling groups, which the government is set to do, and the other is by regulating online casino, which should generate €1bn in tax revenues.
The situation in the U.S. is not that different, at least according to Brandt Iden, vice president of government affairs for Fanatics Betting & Gaming. Speaking during G2E, Iden, who was the architect of Michigan’s regulation of online sports betting and casino, told delegates that as Covid subsidies run out in the next couple of years, states will start exploring online casino regulation as a way to raise revenues.
Pointing to the sports betting launches which came about as a result of pandemic lockdowns, Iden noted that a total of 14 U.S. jurisdictions legalized sports betting in 2020 and 2021, even if these are easier sells when it comes to public opinion and stakeholders. As consumers were confined to their homes and casinos, restaurants, cinemas or shopping malls closed, the ability to bet online generated welcome funds for the states, although not at the levels predicted by industry lobbyists.
Nonetheless, the revenues online casino activities generate could prove hard to resist. As Sports Handle and US Bets report, in Michigan, sports betting operators generated $1.5bn in gross gaming revenue and $779m in adjusted gross revenues from launch in 2020 to August 2024, while online casino generated $6.4bn in GGR and $5.6bn in AGR over the same timeline.
In Pennsylvania, sports betting GGR since launch in 2018 is at $2.6bn with $1.8bn of AGR, while online casino launched a year later and has generated $7.5bn in GGR and $6.2bn in AGR.
If Iden’s prediction proves correct, the scale of taxes that could be gleaned from online casino revenues, especially if populous states such as New York, Ohio or Illinois decide to regulate, shows why lawmakers may well look at regulating the vertical quicker than anticipated.
