Sweepstakes Issues Draw Focus at Next.io Summit

By: Jordan Briggs

Social casinos were one of the many hot topics at the Next.io summit in New York March 12-13, so much so that they got their own well-attended summit on March 11. Generally, there are three types of online social casinos: social casinos with no option to purchase any plays; social casinos with the option to purchase plays and the only thing a user can win is more plays; and sweepstakes casinos with a social platform, where users might purchase plays, and a sweepstakes platform, where users only get free plays (they can never purchase these plays) and the user can win prizes, like cash.[1] For sweepstakes casinos, the sweepstakes platform is intended to promote the social casino and its brand—marketing to get users excited about the product.

Talk of sweepstakes casinos permeated conversation on all three days of the summit—to the point that some panels took to referring to sweepstakes as the other “s” word—with good reason. Law makers and regulators in several states are also looking further into sweepstakes casinos, with a few looking to ban the promotions. As Ifrah partner and Next.io panelist Michelle Cohen explained, there is no uniform definition of “gambling” across US states, but the basic elements are consideration,[2] chance, and prize. However, as sweepstakes casinos are up for examination, many legislatures are focused on the chance and prize elements—surprised by flashy, slot-styled games.

However, with sweepstakes casinos in the limelight, social games and social casinos did not fly under the radar. Many social games have a loyal player base, whether there is a sweepstakes entry opportunity or not. Panelists believe that these games have real longevity, with player bases increasing thanks to mobile versions of games. Video game play, especially on mobile phones, has increased significantly in recent years. According to last year’s Entertainment Software Association report, 78% of video game players in the US play on their mobile devices, representing about 148.6 million Americans.[3] While this represents all video games, two of the top ten grossing games for 2023 are listed as social casinos on the Google Play and Apple App stores, and Gen X and Boomers report playing a high percentage of skill/chance games.[4]

Though a few panelists who discussed social games predicted some consolidation in the middle market social casinos, most also predicted an increase in new entries to the social casino and games markets and continued strength for the well-established existing games. Both predictions seem like a safe bet given the sheer percentage of people playing through their phones—and the possibility that sweepstakes casinos will reassess whether to pivot into purely social casinos, at least in the states where sweepstakes casinos may become riskier or even prohibited.

[1] These are the three types that are not currently prohibited under most state law. Of course, there are websites offering similar gameplay that allow players to buy virtual coins and enter to win prizes using the same virtual coins—these websites are already patently illegal as unlicensed gambling across the U.S.

[2] Usually, but not always, cash or a functional cash equivalent like cryptocurrency.

[3] 2024 Essential Facts About the U.S. Video Game Industry, ESA, available at https://www.theesa.com/resources/essential-facts-about-the-us-video-game-industry/2024-data/.

[4] Id. The report does not define “skill/chance” games, but based on the other categories provided in the report, it appears this category would include social casinos.