Google and Apple, two of the world’s largest tech companies, are under scrutiny for their role in hosting sweepstakes casino apps. A recent lawsuit filed in New Jersey accuses them of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act by enabling apps that critics claim operate as unregulated gambling platforms. This growing legal battle highlights the murky waters of sweepstakes casinos and their impact on both consumers and the regulated gaming industry.
Role of Google and Apple
Sweepstakes casino apps are digital platforms that allow users to engage in casino-style games such as slot machines, blackjack, and roulette. While many of these apps are free-to-play, they often feature in-app purchases for virtual currencies, adding layers of complexity to their operating models.
The rapid rise of sweepstakes casinos has disrupted the regulated gaming industry. Legal online casinos in the U.S., operational in only seven states, generated $6.1 billion in gross revenue in 2022. By comparison, sweepstakes casinos, unregulated and untaxed, are competing on an uneven playing field.
The American Gaming Association (AGA) has voiced significant concerns. The unregulated nature of sweepstakes casinos undermines efforts to create a fair and transparent gambling environment, while also diverting potential revenue from regulated operators. Google and Apple play a pivotal role by hosting sweepstakes casino apps on their platforms. The lawsuit filed in New Jersey alleges that their involvement facilitates the proliferation of these apps, enabling them to operate outside U.S. gambling laws.
The lawsuit accuses Google and Apple of violating the RICO Act by supporting apps that exploit legal loopholes, potentially exposing consumers to financial and psychological harm. The case could set a precedent for how tech companies are held accountable in similar scenarios. Critics argue that the lack of oversight in the sweepstakes casino industry creates significant risks for consumers, particularly younger demographics who are drawn to the casual gaming design of these apps.
Impact on regulated gaming industry
A distinguishing feature of some sweepstakes casinos is the integration of sweepstakes mechanics, which can include real-money prizes. Unlike traditional gambling, these apps operate in a legal grey area, skirting the strict licensing requirements imposed on conventional casinos. Regulations around gambling vary widely across states in the U.S., and sweepstakes casinos take advantage of these inconsistencies.
Most major sweepstakes casino operators, such as Virtual Gaming Worlds (VGW), are based offshore. This allows them to avoid U.S. licensing requirements and taxes, raising questions about their accountability and contributions to the U.S. economy.
Despite regulatory ambiguities, the sweepstakes casino sector has flourished. VGW, the company behind popular platforms like Chumba Casino and LuckyLand Slots, reported an impressive $4 billion in revenue in 2023. VGW’s financial success is matched by its marketing strategies, including partnerships with celebrities like Ryan Seacrest and sponsorship of Ferrari’s Formula One team.
Regulating sweepstakes casinos would level the competitive landscape, protect consumers from exploitation, and generate significant tax revenue for governments. However, implementing these changes faces challenges, particularly given the offshore nature of many operators.
Elevate your business at SiGMA Eurasia Summit February 23-25, 2025. Connect with 14000+ industry leaders hear from 400+ expert speakers and seize new opportunities in Dubai.
