iGaming Daily

00:00
Bad news for an unregulated gaming vertical in the US last week as negative actions swept across the US, limiting where those operators can post up shop. The New York legislature is the latest state government body to pass an anti-sweepstakes gaming bill, plus more states have sent out cease and desist letters to sweepstakes operators. We're going to break down the latest round of action against the sweepstakes and talk about why suppliers should be very concerned on today's episode of iGaming Daily.

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iGaming Daily is brought to you by OptiMove, the number one CRM marketing solution for the iGaming market. I am Jessica Wellman, managing editor of SBC Media, joined by Charlie Horner, media manager for SBC. And Charlie, I go away to Canada and like, people are calling it like Black Tuesday, because all of these things kind of went down on Tuesday last week. Did it seem as dire on your end? What happened to sweepstakes operators over the course of last week?

00:59
I mean, it was certainly was big. Certainly a lot to take in, but it's not quite the, what was it? The Black Wednesday in poker terms. Black Friday. Black Friday in poker. Yeah. So I don't think it was quite that level, but you know, this has been, you know, the storyline that's been brewing all year and it's always nice when we can report on it once again. It was certainly bad news.

01:29
that actually the week started out for the sweeps guys, they were pretty excited because Louisiana legislature had passed an anti sweeps bill and governor Jeff Landry vetoed it and was just like, we have laws on the books for this already. There is absolutely no need for us to pass a bill or sign a create a new law to codify what is already like pretty clear law. For context,

01:57
He was like the Louisiana gaming control board and the attorney general's office, which is where the LGCB is housed under. They have this under control. He used to be the attorney general of Louisiana. So some of this might be like sweeps operators getting in his ear. But I think some of it is also he is just someone who has worked that job before and dealt with this particular situation and is just like, this is stupid. Yeah. I mean, you don't need to pull.

02:26
more work on the Attorney General's office. I'm sure they've got enough going on. But yeah, mean, it's quite big for the Governor to veto a bill of this size, really, I would say. Particularly when the wind has been blowing in the direction of being anti-sweeps. We've seen legislation in multiple states that we kind of assumed that this would just go through. it's interesting to see that it hasn't. But

02:54
On Tuesday, we found out that essentially, I mean, his point was, we already have this workload, it already exists. The AG and the LGCB do not need more laws to send and pursue cease and desist and get these people out. And LGCB heeded the call. Louisiana later that week sent out, I believe they said something like 80 different cease and desist letters.

03:24
I recall it being substantial. So they have sent a lot of enforcement and they said that some of these included sweepstakes sites as well as Bovada. I'm surprised. I really thought they had already done that already, but it might be also more than 40 more. I think some of this is in response to the governor vetoing. It was more a PR that the LGCB is like.

03:49
He's right. We do stuff. We've been sending these out. We've been sending them to sweepstakes operators. Don't worry. We got it. Yeah, definitely. I was going to say that I think either the governor has had a quick word with the LGCB and said, look, guys, we need to do something or we need to be seen to be doing something. Or the LGCB has had an internal conversation and said, yeah, we need to look like we've taken some action and we need to get a press release out there.

04:19
Yeah, it's interesting that the action came just days after the bill was vetoed. Some of it too is like Michigan, as we all know from our inbox, their regulator sings loud and proud every single time they send these to anybody. Other gaming commissions are less vocal about the C &Ds that they send. Sometimes because, you know, it's a quiet way to get people to leave, you know, you

04:47
or like, we're not gonna blow it up, but like, please leave the party. Like the over-served guest at the party, you're just like, I don't wanna make a scene, but can you find the door? Some of it too though is because like sometimes they don't leave, such as the case. So Mississippi gaming commission also announced that they were sending more cease and desist orders to what they deemed were operators in violation of the law in the state, but.

05:14
I sat in a NickelG's audience roughly a year ago and listened to the executive director of the Mississippi Gaming Commission, Jay McDaniel, say, we sent Bovada a letter and they didn't do anything. They just stayed put. So I don't know if it carries the same muster as maybe the Louisiana one or the Michigan one has. it does make you question how much sway these regulators have in terms of just getting the message through and

05:44
and getting these people to stop operating. And it also makes you think, should Louisiana, should the governor have signed the bill because it gives a little bit more power, a little bit more optics to the regulator, to the state, to take more action against these sweeps if we're seen from prior experience in Mississippi that you're not guaranteed that you're going to leave if you send them a cease and desist note. Yeah, I mean...

06:12
I think the concern with the Louisiana one is the concern everybody's kind of expressing, is it's an increa- I'm such a broken record. It's an extremely difficult task to adequately define sweeps in a way that does not inadvertently bring in other social gaming entities. So his point was just like, let's not create that mess and let's just deal with the like somewhat lack of clarity of the laws it's written itself.

06:40
What was interesting at NickelG's that McDaniel made a point about, and it goes back to what we were talking about the other week though, I don't think either you or I think of Mississippi as like a giant market in the United States, but it is a market that does only have retail sports betting.

07:01
There are casinos in Mississippi, but they are strategically in riverfront kind of places. So most of the state doesn't have the easiest of access to get to Biloxi, Tunica. These are also situated right on the borders, and it's more about getting people from Memphis, Tennessee to pop over, or New Orleans to pop over. And his point was, I

07:27
You know, Bovada is not going to leave because Mississippi is an important state for them. I'm curious to see what the sweeps operators do, because we were talking about New York and I was a little we were both surprised that people kind of conceded that state. But that's a state where you can pop over to Pennsylvania, you can pop over to New Jersey, you have lots of access to it that maybe Mississippi is one that the sweeps operators like the offshores are going to be like, oof, that's a bigger chunk than we want to give up.

07:57
It is an interesting perspective. Yeah, I hadn't really flipped a switch on our New York discussion really. Well, how dare you not have intimate knowledge of the geography and casino layout of Mississippi, Charlie? Yeah, we're going back to everyone's favorite segment from a couple of years ago, where Charlie is not American. Yeah, I do love Charlie. We got to bring it back every once in a while, a nice little callback.

08:19
Yeah, so we will see what happens with these and with the cease and desists. Let's take a breather now that we've gone down south and let's come back from break and discuss what is going on in New York. Welcome back to iGaming Daily where we are recapping a really rough week for the sweepstakes industry.

08:40
They thought they had a win in a veto. also potentially have another ban coming their way in New York as the state legislature has approved the bill and all it needs is the governor's signature. And there doesn't seem to be any real indication that she is going to veto it. As much as I understand that this is big news, they all already left. You know what I mean? Yeah, this is just a sign in a form for legality.

09:10
rather than anything practical if they've already, I think, was it all of them or was there maybe just one left? The big ones have left. I mean, and I know they were talking with New York Gaming Commission. I'm sure they were hopeful that there was an opportunity for them to come back. And now as this is getting kind of codified into law, that opportunity has shrunk substantially. But yeah, like I...

09:36
there I'm sure there will continue to be bad actors in this space. And this is the thing with sweeps all the time. We talk about the big names and everything. It's the same as like DFS. There are people that are on as much of the up and up as you can be when it comes to an unregulated gaming site, KYC's blah, blah, blah, AML. And then there are hundreds of little rinky dink operations doing the same thing without such protections. Yeah. Yeah, that's yeah, it's interesting.

10:06
I don't really have anything to add there, Jess. Yeah, I don't know who is still left. I'm sure there are some people. think they want, you you leave to be in the good graces of the New York State Gaming Commission because the genius workaround to the fact that this decision is iffy and seems to cover bigger than what it sweeps by saying, oh, don't worry.

10:32
the New York State Gaming Commission will just decide case by case what is and isn't okay. Which means if you are, say, a brick and mortar casino operator with a social casino partner or your own social casino with something that maybe technically fits in the letter of the law, you're probably going to be fine. Yeah, we've discussed this one in the past, haven't we? Where this is kind of susceptible to cronyism, know, mates getting

11:02
getting their games passed. I mean, there's nothing to suggest that that is what's happening, by the way. You should make that clear. I don't think the intent was ever for these social casinos to be captured in the definition. But you are giving a government appointed group of people executive decision over this, which just as someone who loves a black and white, I don't like. Yeah, and just check some balances and just, you know, public office, making sure everything's on the up and up.

11:31
I think we should probably move away from that. Here's the other thing that I think will be of serious interest to our listeners in particular. What is different from this bill than the other bills is that it is now illegal to supply sweepstakes casino operators face with operations in New York. This includes affiliates. It includes geolocation, marketing teams.

12:01
AML payment processors, cloud surveying, investors of a certain percentage. And I know there are plenty of people in the VC space who go back and forth between regulated and unregulated gaming in the U.S. Now, granted these operators, as we said, largely pulled out, but for this, I think that is the bigger news than the fact that the bill went through. Yeah.

12:31
Yeah, I think this is huge. I've had conversations with a few different people actually who have suggested that this is the way that you sort of crash out of the black market or unregulated sector is that you go hard on the suppliers because if you're running the risk, if you're a payment processor and you're running the risk of losing your license for the regulated market, if you're supplying these unlicensed actors,

12:58
that's going to sway your decision and you're probably not going to supply that unlicensed operator. And if none of the other payment processes do it, then how does the unlicensed operator take payments? And that's the key. think if regulators and lawmakers are really serious about tackling these problems, and that's probably the route to go down. I'd be curious to hear what you think about it, Jess. Yeah, I think to...

13:27
For those who don't know, it's not like these are like fly-by-night suppliers. As we saw from the Hi-5 casino situation in Connecticut, a large number of these suppliers work in both spaces. I mean, you work with clients every day, and I see our client pieces that go up on SBC Americas, and plenty of them are on kind of both sides of the coin. There are, you know, the light and wonders.

13:57
That's a whole other can of worms that play and go doesn't dip their toe in sweeps. But most people do both. And when you're asking them to kind of choose one or the other, it does force the hand of the sweepstakes operator that it's like, if you want to continue having your payment processor, you have to get out of New York.

14:22
Yeah, it's the ace up the sleeve of the policymakers and the regulators. Yeah, really curious to see where this one goes and also very interested to see if any of the jurisdictions have similar ideas because that could have significant ramifications. According to the argument between Victor Rocha and Howard Glazer at Light and Wonder, I don't know who is the louder sweeps opponent, but...

14:48
According to a post on LinkedIn from Howard Glazer, a bill from a group of tribes, including C. Niga, which is the California tribal group, is going to largely replicate the language of New York to implement the same thing in California. Now, this would be huge. I especially as a formal affiliate want to draw attention to the affiliate piece of this.

15:15
As we all know, right now North American affiliates are struggling immensely in saturated states, which have been alive for a couple of years with sports betting and stuff. Signups and stuff are hard to come by. They've all set on their earnings calls. The bread and butter now is Texas, California, Georgia sweeps.

15:41
I am very curious to see what the affiliate industry does about this bill because if you're Katina and you've already laid off 75 % of your staff or whatever it is, you lose California sweeps revenue. I don't know if you can continue. Yeah, yeah, that's the scary part of this. I've worked with and talked to affiliates quite a lot and yeah, North America has been a notable struggle.

16:08
And if you're taking away the last bit of juice that they've got, yeah, it's difficult to see how the North American industry continues moving forward. If obviously, if this comes to light and it passes. Yeah. And this is one too that like none of these suppliers have licenses in California to jeopardize or regulators. I mean, they have a regulatory body, but there's no online really, you know. So

16:38
They don't have anybody to piss off. They're not going to piss off the New York State Gaming Commission the way they would if they actively went against this bill. That in California, I think you're going to see the gloves come off on a certain amount of people and the lobbying power get exerted not just from the sweepstakes sites, but from, you know, the affiliate association and that sort of thing, because now you have nothing to lose. Jess, are you suggesting that people on opposite sides of a

17:08
opinion in California will spend a lot of money to get their own way. Interesting. I've never seen that before. know. What better way to light money on fire than to debate a contentious issue publicly? mean, at least this one's not a referendum. It's just a bill. So all of this will take place in Sacramento behind closed doors, I hope.

17:33
Yeah, but I do think that is entirely different stakes there. It's not the same as New York where you pull out because there are regulated people and that sort of thing and maybe it's not that big a market. California is a huge market and I think you will see people fight back. You may actually finally see a lawsuit from somebody that this, it were to get anywhere, isn't legal because you lose that.

18:02
you lose basically the base of the pyramid. So that being said, the California legislature is a hot mess dealing with a lot of things. Do I think this is high on their to-do list? No. So we'll see where it goes, but like until I hear about a hearing or something, I assume this is just, you know, we're gonna introduce it.

18:29
Because all you have to do is get one lawmaker to say, sure, let's introduce it. But whether it goes anywhere, that remains to be seen. mean, it's more of starting the conversation and maybe that one doesn't get resolved this time around, but maybe in future years it's something that people come back to. But I want to keep an eye on. Yeah.

18:50
We will be keeping an eye on it. We will once the bill gets actually language up on the site, we will are up on the legislative site. We will cover it on SBC Americas, as we will with all of the other legislative news. Check out Maine and the online casino bill there. We've got a story about why the governor, we might have another veto on our hands. Charlie, anything you want to direct people to in terms of what you've written lately? Sure. We've had a few features going out on iGaming expert recently.

19:17
The underlying theme is about promotions, retention, gamification, that kind of thing. So I'd like to point people towards one I did with Kalamba Games talking about their expansion in Europe and Latin America and how promotional tools are playing a big part in that. And then I guess when people are listening to this, we'll have an interview out with Every Matrix's casino CEO, Stian Enger.

19:46
about the launch of their new Engage Suite range of promotional and retention tools. Fantastic. Well, check that out. Check out SBC Americas and the other sites in the SBC network and check back in for another episode of iGaming Daily tomorrow.