Maryland is considering a ban on online sweepstakes casinos as state legislators work to close what many view as a regulatory loophole. The state Senate recently demonstrated strong support for legislation that would prohibit these platforms from operating within Maryland borders.
Senate Bill 860, introduced by Senator Paul D. Corderman, aims to address what lawmakers see as a gap in current regulations. Online sweepstakes casinos exist in a gray area of gambling law, and many sites offer casino-style games through a two-currency model without the same oversight as traditional gambling operations. This structure lets players purchase virtual tokens for gaming activities with real-money prizes available, but without the regulatory requirements faced by licensed casinos. (Source: cardplayer.com/online-casinos/sweepstakes-casinos).
The Maryland Senate Budget and Taxation Committee voted unanimously (13-0) to approve the bill last week, signaling broad bipartisan agreement on the issue. A parallel measure, House Bill 1140, sponsored by Delegate Eric Ebersole, awaits consideration by the House Ways and Means Committee.
The proposed legislation would grant the Maryland State Lottery and Gaming Control Commission the authority to deny gaming licenses to operators of sweepstakes-based games. More significantly, it would establish substantial penalties for violations: individuals or companies found operating such websites could face fines ranging from $10,000 to $100,000 and up to three years imprisonment. Market participants have taken notice and multiple online sweepstakes platforms have already withdrawn from Maryland in anticipation of the passage. A few have already added Maryland to their lists of restricted states.
This pattern extends beyond Maryland, as several platforms have suspended users from at least 12 states where similar regulatory efforts exist. The trend points toward a national reconsideration of how these businesses function within state gambling frameworks.
Maryland legislators expressed frustration that sweepstakes casinos exploited regulatory gaps to operate outside the jurisdiction of state gaming authorities. Unlike traditional casinos and licensed sportsbooks, which face strict oversight and taxation requirements, sweepstakes-based systems largely avoided comparable scrutiny.
The Maryland situation mirrors actions across numerous states. Mississippi, New York, Washington State, and others recently took steps to pass similar legislation targeting perceived loopholes that permit these sites to function as de facto casinos without standard regulations.
New Jersey also joined this regulatory push, filing bill A5447 to prohibit these platforms permanently in the Garden State, adding to the legal problems sweepstakes casinos face. This action surprised industry watchers, particularly after an earlier bill (A5196) filed in January suggested lawmakers might instead consider options to regulate rather than ban these operations.
The core issue centers on the distinction between traditional gambling and the sweepstakes model. Conventional casinos operate with explicit licenses, pay substantial taxes, and submit to comprehensive regulatory oversight. Sweepstakes casinos claim to differ by offering games through promotional sweepstakes rather than direct gambling, a distinction that legal experts and legislators increasingly question.
Proponents of the ban argue that sweepstakes casinos offer essentially identical experiences to regulated gambling without providing the same consumer protections or contributing tax revenue to state coffers. Critics of the ban suggest that regulation rather than prohibition might better serve public interests.
For Maryland residents who patronize these sites, the legislative action means access will likely disappear in the near future. The rapid market exit of multiple platforms suggests that operators anticipate the legislation will pass and want to avoid potential legal penalties.
The sweepstakes casino industry has expanded rapidly in recent years, particularly in states with limited legal online gambling options. These platforms advertised themselves as legal alternatives to traditional online casinos, but the regulatory landscape shifts as more states scrutinize their operations.
If Maryland adopts this legislation as expected, it will represent another significant setback for the sweepstakes casino business model nationwide. The unanimous committee vote indicates strong legislative momentum that will probably result in the bill becoming law, further restricting the geographic footprint where these businesses can legally operate.