Senator Joseph Addabbo, the Chair of the New York State Senate Racing, Gaming, and Wagering Committee, has announced his intention to push for a ban on sweepstakes casinos.

This is following the discovery of a loophole that allows these unregulated platforms to operate across the state, potentially exposing vulnerable populations, particularly younger individuals, to gambling risks.

During a recent taping of a podcast series on New York State gaming hosted by political news organization City and State, Addabbo revealed his concerns regarding the growing popularity of online sweepstakes casinos. These sites, which are often based offshore, allow players to engage in virtual casino-style games for free while enticing them to purchase virtual Gold Coins that can later be redeemed for cash prizes through a system that exploits legal gray areas.

“One of my primary objectives as Gaming chair is ensuring New Yorkers are protected from gambling operations that have the potential of becoming more problematic without proper legislative action, such as unregulated sweepstakes casino operators,” stated Addabbo. 

“Many sweepstakes’ operators are located offshore, making enforcement limited or impossible, and our most vulnerable populations, youth and elderly, are most often targeted, which is why I want to act to address this existing loophole.”

This dual-currency system—gold Coins and Sweeps Coins—is at the heart of the issue. While players often purchase Gold Coins, neither currency holds real-world cash value. However, Sweeps Coins can be used to win prizes, including cash rewards, creating an indirect gambling experience that skirts legal restrictions by claiming to be a promotional sweepstakes rather than a direct gambling operation.

“The use of money to play a game and win more money is simple gambling and should be safely regulated,” Addabbo added.

Addabbo explained that the distinction between sweepstakes casinos and traditional online casinos is misleading. Although players do not directly deposit money into their accounts, they are still spending money to purchase virtual coins, with the potential to win real-world prizes. 

Addabbo states this loophole presents a danger, particularly for younger people who may be enticed by free-to-play advertising campaigns that lead to spending money on Gold Coins.

“To close this loophole, I will work to ban or incorporate Sweepstakes Casinos in the state, akin to current laws in Michigan, Idaho, and Washington, and I will push for iGaming as a safe, effective alternative for online casino enthusiasts,” Addabbo explained.

Under current regulations, sweepstakes casinos are permitted to operate in most states, including New York. However, due to their reliance on offshore servers and the complex nature of their reward systems, these operators are not subject to the same oversight as traditional online casinos, leaving consumers vulnerable to exploitation.

Addabbo’s proposed action would align New York with states like Michigan, Idaho, and Washington, which have already implemented stricter regulations or outright bans on sweepstakes casinos. 

He emphasized that regulating online gaming through a legal, licensed iGaming system would provide players with a safer, more transparent option while generating significant tax revenue for the state.

The Senator called on his colleagues in the legislature and Gov. Kathy Hochul to take swift action against unregulated sweepstakes casinos. He also urged them to consider the potential benefits of allowing legal online gaming in a regulated environment, which would help mitigate the risks posed by unlicensed operations and provide a safer experience for New York residents.

Addabbo currently represents the Senate’s 15th District, which includes the neighborhoods of Glendale, Middle Village, Ridgewood, Woodhaven, and other surrounding areas.