Michigan Gaming Regulatory Body Issues Operator Stop Orders for Sweepstakes Businesses

Gambling joints peddling cash prizes that dodge regulations and pop up in uncharted territories started cleaning shop last year in Michigan, and the Michigan Gaming Control Board (MGCB) has officially admitted its role in these departures. A press release from the MGCB dated January 18 confirmed they dispatched cease-and-desist letters to three operators: PredictionStrike Inc., Sweepstakes Limited, and VGW Luckyland Inc.

PredictionStrike is a conglomerate based in New York, cheekily advertising as "the one and only fantasy stock market."

Operators Sweepstakes Limited and VGW run social casinos using the sweepstakes model. Sweepstakes Limited manages Stake.us, a social gaming counterpart to their international crypto-friendly casino Stake. VGW commands the U.S. sweepstakes casino game, overseeing brands such as Chumba Casino, Luckyland Slots, and Global Poker.

These sites offer a relatively safe alternate to underground, unregulated offshore casinos in states where land-based casinos have yet to gain traction. They toe the line for federal sweepstakes laws, although several states dispute their legality.

Michigan has been actively guarding its regulated online gambling operators by paving the way for unregulated competitors. Even where they are considered legal, social gaming sites don't pick up the same hefty privilege tax on revenue as their regulated counterparts.

Executive Director of the MGCB, Henry Williams, expressed his stance:

We don't fancy sketchy operators sneaking around our laws, leaving citizens exposed and vulnerable on unregulated sites with no recourse. Plus, these unlicensed sites siphon funds, leaving communities high and dry because they don't pay taxes like their legit, legal counterparts would.

Betting Operators Step Out of Michigan

All three companies named in the press release vacated Michigan's market. Predictably, Stake.us and VGW had resolved to leave the scene prior to receiving the cease-and-desists.

It appears that Stake.us altered its terms to omit Michigan players sometime before July 2023, although the specific date isn't documented in their change log for the terms and conditions. Apparently, articles published as early as July 2023 reported that Stake.us was not accepting players from Michigan. According to the MGCB, they received their letter on November 2, 2023.

Chumba Casino and Luckyland Slots declared their decision to exit the market on October 25, 2023, describing it as a "business move." This decision came shortly after the MGCB clamped down on another free-to-play casino, Golden Hearts, and handed down a decision against daily fantasy sports contests. However, VGW didn't receive their formal cease-and-desist letter until December 5, 2023.

Despite suspending purchases from November 1, 2023, VGW had planned to allow customers to continue playing and redeeming prizes until February 1, 2024.

An examination of the Internet Archive's Wayback Machine reveals that PredictionStrike had not yet listed Michigan as an excluded state on September 25, 2023. By January 16, 2024, it had, but there are no archived versions of the site between those dates, making it impossible to discern when the decision was made.

Essentially, none of the sweepstakes casinos in the U.S. still cater to Michigan. Fortune Coins vacated the scene at some point after January 11, with their terms and conditions previously stating that determining compliance with state laws was the players' responsibility. Zula departed just before, on January 10.

The sweepstakes casino business model predominantly rests on federal law, making it an area grayly addressed by most states' statutes. As such, these sites remain legal and accessible in over 40 states, but the landscape is ever-changing. Federal sweepstakes law provides a default legal basis, but legislators, judges, and regulatory bodies can move to outlaw them with relative ease compared to regulated products.

Apart from Michigan, the states unequivocally against sweepstakes sites are Idaho and Washington. None of the sites reviewed by Bonus cater to those states with the sweepstakes model; however, some offer for-fun play in Idaho without the prospect of winning prizes.

Some sites electively exclude a few other states. Stake.us takes a cautious stance, barring players from the usual culprits (ID, MI, WA) as well as:

Kentucky
Nevada
New York
Vermont

However, Stake.us uses cryptocurrency to process prize payouts, a novel and intricate legal feature that may have influenced these decisions. Other sites have excluded one or two additional states from that list, while VGW remains operational in 47 states and the District of Columbia.

The Michigan Gaming Control Board (MGCB) has dispatched cease-and-desist letters to several operators, including PredictionStrike Inc., Sweepstakes Limited, and VGW Luckyland Inc., who run casino-games, social casinos, and sweepstakes casinos.
Sweepstakes Limited manages Stake.us, a social gaming counterpart to their international crypto-friendly casino, where they offer casino-games, and Sweepstakes casinos like Chumba Casino, Luckyland Slots, and Global Poker.
Operators, such as VGW, who run social casinos using the sweepstakes model, often operate in a legal gray area, as their business model relies on federal laws that states may or may not fully support.