Sweepstakes casinos pull out of Michigan

Tuesday, October 31, 2023 7:44 PM
Photo:  Shutterstock
  • Steve Chen — Special to CDC Gaming

After a two-year investigation, Michigan Attorney General Dana Nessel ordered Golden Hearts Games to cease its operations in the state. The social casino will no longer accept Michigan players.

Subsequently, Virtual Gaming Worlds (VGW), operator of Chumba Casino, Global Poker, and Luckland Slots, announced this week that it would also stop accepting players from Michigan.

“VGW continually evaluates their business operations in the interests of all their stakeholders, and after careful consideration, they have decided to take this course of action,” said the company in a statement.

VGW’s suite of popular social gambling brands, including sweepstakes casinos and poker sites, has been accessible in most U.S. states. With the recent announcement, Michigan joins the likes of Idaho and Washington on the list of states where VGW’s services are unavailable.

While these platforms serve as alternatives in states where legal real-money online casinos are absent, their operational model differs. Unlike traditional casinos that deal in U.S. dollars, social casinos use their own digital currencies that have no monetary value. Despite this, the prizes they offer are genuine, making them attractive to a large user base.

For Michigan players on VGW’s platforms, changes are imminent. From Nov. 1, they will no longer be able to buy coins on VGW sites. However, they can utilize their existing balances until Dec. 1. Players have until Feb. 1, 2024, to claim any pending prizes before they are forfeited.

VGW’s exit from Michigan signals the potential challenges that other social casinos might face in the future. As more states move toward regulating real-money online casino play, the environment for social casinos becomes increasingly uncertain. Advocates state that in non-legal gambling states, these operators provide an alternative to unregulated offshore operators.

In a Sept. 12 statement, Nessel outlined the risks associated with unlicensed gambling.

“Unlicensed gaming robs our schools and our government of essential funding and leaves consumers unprotected,” Nessel said. “When companies like Golden Hearts attempt to circumvent Michigan’s gaming laws, they create the false impression that their games are legal and safe for consumers. My office is committed to ensuring that our gaming laws are strictly enforced, and those who violate those laws are held accountable.”

Equally important was the Michigan Gaming Control Board’s decision on Oct. 11 to ban pick’em fantasy products, stating operators allowing “proposition selection or fantasy contests that have the effect of mimicking proposition selection… and any fantasy contests that involve, result in, or have the effect of mimicking betting on sports” would be banned. Each of these decisions indicate a desire to crack down on operators taking advantage of grey areas in the state’s gambling statutes.