Providing insight at the SBC Summit North America, Mark Balestra, US Special Counsel at Segev LLP, emphasised that the appetite for entry to the sweepstake casino market continues to escalate.
Balestra detailed that an ‘overwhelming request’ from clients is to grow into the sweepstake space. This provides one of the key ingredients enabling operators to expand into the US and navigate a far smoother regulatory path to tapping into a new audience.
Nonetheless, whilst ‘a few businesses are thriving’ in Balestra’s view, he added that ‘we are now seeing a flood of industry entrants’. He believes one of the challenges lies in supporting these newcomers in understanding the nuances around legal framework in the sweepstake sector.
He revealed that there are businesses tapping into sweepstakes as a promotional tool, citing the example of McDonald’s Monopoly as one of the most successful and engaging sweepstake games.
Placing a closer analysis on the role of social casinos in the market, he added: “There are a number of things that distinguish traditional and non-traditional sweepstakes.
“When I say non-traditional, I mean the social casino. But the main one is that with traditional sweepstakes, they’re only promotional tools. Whereas with social casinos, they are the primary offering. They are the central profit centre.
“So why do they fall into a grey area? I mean, I’m sure we’ve all heard that it’s not black and white, and it’s a grey area of law where they kind of operate. And this is because the sweepstakes laws were intended to allow businesses to offer these promotions.”
He went on to look at case studies. The focus of these has usually been around alternative methods of entry and the legitimacy of that alternative method of entry.
Also the ‘equal dignity is increasingly complex because it deals with measuring what suffices as consideration.’
He continued: “The court’s interpretation of consideration has evolved over the years. Originally it was simple contract consideration. No need to give anything of value. If there’s an exchange, then that suffices as consideration. So any kind of agreement where you even agree to enter a contest, that in itself is consideration. And it’s evolved to address gambling consideration over the years.”
Largely case study deals with traditional sweepstakes that you would see as a promotional giveaway. So they haven’t defined exactly how far that door opens. In the 21st century, social casinos are trying to squeeze through that door, according to Balestra.
“There are limitations to how far that goes and that’s where equal dignity comes into play. Courts have found that it’s not enough to provide an option for free entry if a promoter creates a burden or an obstacle to that option. And some examples, again, in the traditional space, traditional sweepstakes is the Boyd v. Pickley Wigley case, where it’s a supermarket contest.
“They basically said by requiring participants to visit the store to receive the game piece used to get the prizes that the operator was barring.”
