You've seen them advertised all over television.  Sweepstakes casinos.  They claim to be free but how in the world can a site that offers casino games for free afford to pay the likes of Ryan Seacrest to promote their brand?  The answer:  They are free to a point.

The Sweepstakes Casino Model

The concept is nothing new.  Our friends at ACR Poker have long offered a free-to-play poker option.

ACR Poker's model is one in which the new registrant will eventually want to play real-money poker once they hone their skills.  This customer will regularly be greeted with upcoming real money poker tournament announcements and generous welcome bonuses.

The sweepstakes model really is not much different. 

Instead of using real money to bet and win, players use virtual currencies (often referred to as gold coins or sweeps coins), and the potential to win real cash comes through a sweepstakes system that is not directly involving gambling.  When the customer wins, he or she can redeem their coins for real money or prizes.

Everyone is Getting Into the Game it Seems

We mentioned Ryan Seacrest.  He's got a pretty sweet day job as the new host of Wheel of Fortune.  Seacrest must have found some appeal in these sweepstakes casinos.

So too has Publisher's Clearing House.

Some of us grew up on their commercials featuring the Prize Patrol.

PCH will partner with gambling firm, SCCG Management, to help manage this new move. SCCG will primarily target PCH’s new partnerships as it transitions to sweepstakes casino business, as well as other developments.

SCCG claims that part of its plans to succeed is by leveraging its expertise with PCH’s massive customer base.

A few days after announcing they had entered into the sweepstakes casino arena, the company swiftly filed for bankruptcy.

Founded in 1953, PCH is most widely known for their sweepstakes and prize-based games which were introduced in 1967.  During the 80s and 90s their commercials aired almost as often as those Wegovy and Skyrizzi ads we see today.

Not Welcome Everywhere

Depending on which state you reside in, it's possible sweepstakes casinos will go the way of the dodo bird.

Sweepstakes casinos have mostly operated unimpeded in the US but that could soon be changing, at least in some states. There are vast civil enforcement powers of a state attorneys general with remedies that include injunctive relief, restitution, disgorgement of profits. sequestration of assets, dissolution of the business, and civil penalties.

Gaming attorney Daniel Wallach observed:

"Without question, an injunction requiring the operator to shut down the illegal gambling website (or to no longer do business within the state), combined with the forced payment of tens (or even hundreds) of millions of dollars to injured consumers and state treasuries in the form of restitution, disgorgement, and civil penalties - along with the prospect of joint and several liability for payment processors and individual liability for those involved in running the business - can serve as a powerful deterrent to other companies likewise skirting state anti-gambling laws."

States such as Michigan, Florida, Delaware and Pennsylvania are already cracking down.

Mostly this is a result of state regulators throwing cold water on the concept that these sweepstakes casinos are not real gambling.  The websites are often seen as a threat to state run casinos, including regulated online operators, as is the case in New Jersey and Michigan.