Virtual Gaming Worlds, which operates some of the most prevalent sweepstake casinos, has hit back over allegations that it is breaching gaming laws.
As reported by the Financial Review, Laurence Escalante, the owner of the group, rejected the notion last week from the AGA that took issue with the regulatory framework around sweepstake casinos.
Recently writing for Vixio Regulatory Intelligence, the body emphasised that sweepstake casinos are incredibly similar to that of regular casinos. However, in most circumstances, these firms operate under a far less intense regulatory environment.
According to the AGA, sweepstakes avoid regulations and licensing through a dual-currency system, however, they do still ‘look and play like an online casino’. It warned that ‘the ‘opaque nature’ could also significantly elevate the risk of bad actors having an opportunity for illegal activity.
The AGA stated: “The lack of regulatory oversight presents many risks for consumers as well as the integrity and economic benefits of the legal gaming market through investment and tax contributions. These sweepstakes-based operators have weak (if any) responsible gaming protocols and few, if any, self-exclusion processes.”
However, Escalante cited the importance of the firm’s financial crime controls as being vital when it comes to the sector, as he described them as ‘the best in class’.
It comes amidst the growth of the appetite for the sector amongst operators and those looking to engage with North American players.
Speaking at the SBC Summit North America, Mark Balestra, US Special Counsel at Segev LLP, revealed that the group has had ‘overwhelming requests’ from clients to grow into the sweepstake space.
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.”
This was also recently echoed by the desires of Catena Media as the group stated it is one of the ‘fastest growing verticals’ in the sector.
CEO Manuel Stan also outlined that he feels the sector is only going to continue in its trajectory of growth.
He stated: “Our products are focused on growing the sweeps vertical. I think it’s twofold. Right now, we see that generally overall in the industry being one of the fastest-growing verticals and we capitalise on it. But also, we position ourselves for post-regulation in the bigger states in the US, where we will be able to have built our databases around our brands to capitalise when the likes of California and Texas will be regulating.”
