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Running an online sweepstakes gaming software business is a complex affair. Like online casinos, sweepstakes casinos too are subjected to various legal complexities that can vary significantly from one geographic area to another. Hence, in order to run a successful sweepstakes business, it is highly important to be aware of the necessary legal compliances regarding sweepstakes laws in different countries or territories.
Here in this article, we’ll discuss this topic in detail. Keep reading!
What Is Sweepstakes Casino?
Online sweepstakes casinos are similar to traditional casinos that offer various kinds of gambling games to play online. However, unlike real casinos, sweepstakes casinos follow a ‘free-to-play’ structure that makes spending money on the sweepstakes platform optional/not required.
Sweepstakes casinos run on a dual virtual currency system, i.e. Gold Coins and Sweep Coins. Gold Coins are the primary currency which are offered to players for free when they sign up. Players can also earn Gold Coins by winning games or by purchasing them in exchange for real money. Players use these as the wagering currency that are required to play various sweepstakes games in the sweepstakes software.
The Sweep Coins have another role to play. Players need to collect them by playing and winning games. When enough is collected, they can redeem/exchange them for real-life prizes having real value. Sweep Coins cannot be directly purchased and must be won, or received as bonuses for playing at the sweepstakes platforms.
Difference Between Traditional Online Casinos And Online Sweepstakes Casinos
If you want to participate in traditional online casino gaming, then making a monetary deposit is a must. In order to play the various gambling games present in the online casino, placing bets with real money is necessary.
However, as per sweepstakes law, spending money is not mandatory. Sweepstakes casinos run on virtual currencies, and Gold Coins are used for betting and playing different games on the platform. These Gold Coins are offered to players for free when they sign up. Players can further earn them by winning games, or by receiving them as bonuses for completing various tasks in the platform. They also have the option to purchase Gold Coins if they wish to play more, but this is completely optional.
Primary Rules For Operating Legal Sweepstakes Casinos
A ‘No Purchase Necessary’ Disclaimer
Online sweepstakes platforms must have a ‘free’ entry option. Spending money on the platform or making any purchase from the business partners or sponsors must not be mandatory in order for it to be considered a legal ‘sweepstakes’.
Alternative Method Of Entry
Even if the sweepstakes casino has a way of entry that involves spending money or making a purchase, it must also include an AMOE or Alternative Method Of Entry that’s free of cost.
Eligibility Requirements
The sweepstakes casino platform must list out the eligibility requirements for players to participate, including the legal age, nationality, and any other criteria.
Void Jurisdictions
The sweepstakes casino should also clearly declare its area of operations, and list out the areas where the jurisdiction is void, and hence, the sweepstakes is not operable.
Odds Of Winning
Another important thing that a sweepstakes casino business must declare is the odds of winning for each sweepstakes casino game. The odds should strictly follow statistical facts and must not be misleading.
Prize Value & Description
The sweepstakes casino must also declare in advance about the prizes, their descriptions and monetary values.
Tax Obligations
If the sweepstakes involves a high amount of prize value, then it must also include details about the tax obligations for winners.
Online Sweepstakes Casinos: Legal Compliance In Different Countries
United Kingdom
Gambling activities are controlled by the Gambling Act 2005 in the UK. However, sweepstakes casinos don’t fall under gambling in this country, and they are generally exempt from gambling rules and regulations. For sweepstakes casinos, it is mandatory to offer a ‘free of cost’ entry option and follow ethical code for marketing and promotions, without misleading the target audience.
Germany
Germany has a strict policy regarding gambling and online casinos require extensive legal compliance. Sweepstakes casinos fall into a legal gray area in Germany since it doesn’t involve direct betting of money. Despite that, even sweepstakes casinos are highly regulated.
Spain
Gambling is legal in Spain and is regulated by the Spanish Gambling Act 2011. Sweepstakes casinos are legal, but online platforms must obtain necessary licenses from the DGOJ (Directorate General for the Regulation of Gambling) of Spain in order to operate legally.
Singapore
Singapore has strict regulations regarding gambling and online casinos are mostly restricted. Even sweepstakes casinos are heavily regulated, and unauthorized online sweepstakes platforms are strictly penalized.
Philippines
Gambling is generally legal in the Philippines and is controlled by the Philippine Amusement and Gaming Corporation (PAGCOR). Online casinos are highly popular in the Philippines and so are sweepstakes casinos. Although online sweepstakes casinos don’t attract more complex legal compliance like traditional online casinos, it is still advised to contact the local authorities and employ a legal team before setting up a sweepstakes business here.
Legal Compliance For Sweepstakes Casinos In The United States
Online sweepstakes casinos are regulated by the Federal Trade Commission (FTC). Unlike the traditional online casino, which is considered gambling and is legal in only 7 states, sweepstakes casinos fall under a more lenient legal structure and is considered legal in 48 states (except in Washington and Michigan).
Sweepstakes casinos have their own legal requirements that are not as strict as online casinos or gambling. Since sweepstakes casinos don’t involve mandatory money spending, and follow a free-to-play model, hence, they are not categorized as gambling per se.
In order to be considered as a ‘sweepstakes casino’, an AMOE or Alternative Method Of Entry that doesn’t involve any purchase or spending real money, is one of the basic legal requirements for sweepstakes.
In a few states, registration and bonds are required for sweepstakes casinos in order to operate legally.
Sweepstakes casinos are completely banned in Washington and Michigan states.
Responsible Gaming & Player Protection In Sweepstakes Casinos
The consistent and fast rise of sweepstakes gaming software and its skyrocketing popularity among players globally can sometimes pose threats to the industry. Like all industries, unregulated growth and business can become detrimental to the sustainability of sweepstakes businesses.
This is why responsible gambling practices and player protection systems are highly coveted these days. Renowned and popular online sweepstakes operators are going at length to promote a healthier, more sustainable approach to sweepstakes gambling, and including tools and resources in their platforms that promote responsible gambling.
Why Is It Important To Be Completely Legally Compliant With Your Sweepstakes Casino?
Avoid Penalties
Unauthorized and illegal online sweepstakes businesses can attract hefty penalties, and lawsuits can be filed against you that might result in severe consequences.
Protect Your Reputation
Being branded for illegal activities can cause irreparable damage to your reputation. In order to establish yourself as a dependable and reputed organization, staying on the right side of law is necessary.
Assure Your Customers
In order to attract more customers, and develop your own loyal pool of followers, players, or customers, legal assurance is necessary.
How Can GammaStack Help?
Wondering how to get started? GammaStack is here to help!! We have over 13+ years of market experience, and an impressive portfolio of clients belonging to 45+ countries worldwide. GammaStack not only offers the most impressive online sweepstakes software development and sweepstakes game development services, but also provides complete assistance to gain all necessary licenses and legal permissions from the jurisdictions under which your sweepstakes business will be operable. Whether you need to develop a sweepstakes platform, looking for game integrations, or just setting up a business and need overall assistance, GammaStack is your one-stop solution for all issues related to sweepstakes casinos. Contact us now!
Frequently Asked Questions
Yes. Sweepstakes casinos are generally legal in countries around the world. However, legalities can vary based on the jurisdictions.
For online sweepstakes casinos, businesses don’t need gambling licenses to operate in the US, as it is not categorized as gambling, owing to its ‘no purchase necessary’ feature. It can operate legally in 48 states of the US, except in Michigan and Washington. However, if it involves high-value prizes, then registrations and bonds might be required in some states, particularly in New York, Florida, and Rhode Island.
Yes. GammaStack can help you acquire all the necessary permissions, bonds, and licenses necessary for operating legally under a particular jurisdiction.
GammaStack also offers online sweepstakes software development services and sweepstakes game development services.
Yes. GammaStack also provides online casino software development services, online casino game development services, post-launch maintenance services, and more.
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