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Barring a veto from Gov. Greg Gianforte, Montana will soon become the first state to have enacted a ban on casino-style online games that award cash prizes by way of a sweepstakes. While the bill in question does not mention sweepstakes casinos by name, the of the bill would render their business model unworkable.
The presumptive law prohibits any social casinos without prizes to continue operating.
The law might be more of a formality than a game-changer. Many of the companies offering such games stopped serving players in the state late last year. Nonetheless, Montana could make history by being the first to get a new law on the books to answer the question of the legality of sweepstakes casinos.
SB555 close to finish line in Helena
While several other states have tried, Montana looks to be the only to succeed thus far in carving sweepstakes casinos out of its legal gambling landscape. A veto is still possible from Gianforte, as he has not provided comment on Senate Bill 555.
However, the bill ed with a veto-proof majority in both chambers of the Montana legislature, potentially setting up an override if Gianforte does veto SB555. The proposal interjects a few lines into the state’s code pertaining to the definition of “Internet gambling” in Montana.
The term includes online casinos, by whatever name known, which constitute internet gambling and therefore are prohibited. This includes but is not limited to any platform, website, or application that knowingly transmits or receives gambling information, allows consumers to place a bet or wager using any form of currency, and makes payouts of any form of currency. Online casinos that do not allow the use of currency of any kind are not considered a gambling activity and therefore are permitted.
Furthermore, offering such games in Montana is a criminal offense under another body of text that the presumptive statute inserts.
A person who purposely or knowingly operates any type of illegal internet gambling site within the state’s borders, including operating an online gambling site in the state through licensed or unlicensed offshore sources, is subject to felony criminal liabilities as provided under this section.
Websites offering sweepstakes-based, casino-style games fit the bill’s description for impermissible gaming due to their use of digital currencies and collection of player data. Additionally, sweepstakes winners receive cash prizes, further making their operations in violation of SB555.
While SB555’s enshrinement would establish a new status quo for these businesses in Montana, some of them have already exited the state. The conditions that have led to Montana’s enactment of this law could be difficult for other states to replicate, too.
Sweepstakes operators complying in advance
Many popular sweepstakes operators have already stopped accepting entries from people in Montana. Companies that own the Chumba Casino, McLuck, and High 5 Casino websites are among these entities that have already pulled out of Montana.
Such exits are not yet universal, however, as the latest conditions and for Stake.us do not list Montana among the casino’s exclusions. Remaining brands may geofence out Montana upon enactment of SB555.
To date, companies offering casino-style sweepstakes games online have not devoted much of their lobbying resources to fighting SB555’s progress in Montana. The state’s low population is a likely factor in that decision as many other more-populated states have considered similar bills.
Sweepstakes casino operators’ decision to allocate resources elsewhere, along with Montana’s low population, played a part in Montana’s success in getting SB555 close to the finish line. In states where operators deploy more lobbying resources, that will be more difficult.
SB555’s language could make it problematic for other states
The language of SB555 could make it less likely to be replicated in other states, too. SB555 effectively bans all online casino games in Montana, meaning that another state that would enact a similar bill would complicate its own future regulation of real-money online casino games.
To do so, the legislature would have to first at least alter, if not repeal, that statute. As many of the other states that have considered sweepstakes casino bans have also weighed legislation to license online casinos that use US dollars as their currency, there is an extra challenge of doing the former without hindering the latter.
In Montana, legal online gambling is very limited and that landscape could soon become even smaller. For sweepstakes operators, Montana seems to be an acceptable loss.
