Tennessee Regulators Go after Sweepstakes Casinos

Several states, like Maryland, have already banned access to sweepstakes casinos. More than a dozen other states are looking at the possibility of doing the same thing. Tennessee regulators have indicated they are ready to join the fray.

Tennessee Attorney General Jonathan Skrmetti has announced that he and other state regulators are cracking down against "sweepstakes casinos" that are currently operating illegally within the state's borders. This crackdown is being instituted in an effort to protect residents from unscrupulous operators who are masquerading as legitimate gaming sites. It's noteworthy that online casino gambling is not legal in Tennessee.

Based on recent data, as many as 40 such casinos are serving Tennessee residents without any kind of regulatory oversight. Most, if not all, of these casinos have received cease-and-desist letters, requiring them to disable their unlawful gambling platforms and immediately cease operations. Simply put, they cannot operate within the state without the proper licensing, licensing that is not currently available.

Skrmetti is hoping that by taking this stand, he might motivate attorney generals in other states to do the same. To be clear, this is not yet an outright ban. The Attorney General is hoping the warning will suffice, avoiding the need to take legal action. Of course, the sweepstakes casino community has made clear that they won't go quietly into the night.

What is the Specific Issue?

Sweepstakes casinos market themselves as "social casinos," where players are encouraged to interact with one another. At issue is the fact that many of these sites act as dual-currency systems.

For registering, players are given "gold coins" that can be used for casino play. These coins have no redemption value, and winning players only receive more coins that can be used for additional free casino play. Intermittently, said casinos will award additional gold coins to keep players coming back for more. The goal is for these casinos keep players playing and collect revenue from site advertisers. If this were the beginning and the end, there would likely be no issues.

However, most sweepstakes casinos also give out "sweepstakes coins." These are coins that can be used to enter sweepstakes drawings and gaming tournaments where actual prizes are awarded. There's the rub. The fact that players can financially benefit from online casino gambling activities is currently illegal in Tennessee. Here's a list of possible awards that could await winning participants:

• Gift cards to large merchandisers like Amazon or Target


• Electronics - TVs, PCs, laptops, smartphones, ect.


• Vacation and travel packages


• Actual cash prizes

Further complicating tis issue is the fact that many of these casinos allow customers to purchase additional sweepstakes coins. By allowing this, customers are effectively given access to real online casino gambling activities. Without the proper protections in place, this type of customer could be subject to rogue casino operators and the possibility of gambling addiction. That flies right in the face of why a state like Tennessee has been hesitant about passing any iGaming legislation.

Note: Retail casino gambling is also illegal in the state at tis time.