The Garden State has joined a growing number of U.S. states cracking down on sweepstake gambling operations.
Governor of New Jersey, Phil Murphy, has approved a new law restricting promotional sweepstakes-style gambling operations across the state. He signed Bill A5477 on August 15. The move marks a victory for lawmakers and regulators. They had grown concerned that sweepstakes, which were quickly gaining popularity, were slipping through regulatory nets. These operations had been functioning in a legislative grey area despite their similarity to traditional regulated gambling.
The new law clearly defines sweepstakes as any online or in-person contest, game, or promotional event that uses dual-currency payment systems. In sweepstakes casinos, players use two types of virtual currency. Gold coins have no monetary value and serve only as gameplay credits. Sweepcoins, on the other hand, can be redeemed for cash prizes or gift cards.
The new law allows only certain types of sweepstakes to continue operating. These include sweepstakes that offer a free method of entry, or those where entry is incidental to purchasing food, soft drinks, or merchandise worth no more than USD 20. The Director of the Division of Consumer Affairs (DCA) may approve a higher value. However, the merchandise cannot include coins, online credits, or tokens that either serve only as entry into the sweepstake or can be exchanged for money or goods.
Violating the legislation comes with heavy fines. Offenders face a penalty of USD 100,000 for the first offense. Each additional offense carries a fine of USD 250,000. Ignoring a cease-and-desist order can result in penalties of up to USD 25,000.
The DCA now has new powers to regulate and enforce all sweepstake-related provisions in the legislation. The Division of Gaming Enforcement (DGE), meanwhile, remains responsible for other illicit gambling prohibitions.
