Michigan Continues to Target Sweepstakes Casinos

Quick Intro

Michigan’s gaming regulators have intensified scrutiny over sweepstakes casinos, issuing cease-and-desist letters to major players in the industry, including the parent companies of Stake.us and Global Poker, as well as the fantasy sports platform PredictionStrike. This move by the Michigan Gaming Control Board (MGCB) signals a significant enforcement effort against what it deems as illegal online gambling activities within the state.

Regulatory Concerns and Industry Implications

The MGCB’s actions have raised concerns within the sweepstakes casino sector, which enjoys popularity across many states where it operates legally. The fear is that Michigan’s stance could inspire similar regulatory crackdowns in other jurisdictions, potentially redefining the legality of sweepstakes casinos across the country. Stake.us and Virtual Gaming Worlds (VGW), alongside PredictionStrike, were specifically targeted for operating without the proper licensing, as per the MGCB’s determination.

Details of the Cease-and-Desist Orders

Stake.us, known for its use of cryptocurrency in gaming transactions, and VGW, which operates several online gaming sites including Chumba Casino and Luckyland Slots, were accused of facilitating unlicensed gambling operations. The MGCB’s executive director, Henry Williams, emphasized the importance of gambling regulations and the risks posed by unregulated sites to Michigan residents. According to the MGCB, Stake.us promoted an unlicensed online lottery, while VGW was involved in offering illegal internet games. PredictionStrike was cited for offering unlicensed internet gaming and sports betting. Despite these allegations, there was no mention of fines being issued, though steps were taken by the companies to restrict Michigan residents from accessing their sites.

Michigan’s Ongoing Enforcement Efforts

This is not the first instance of Michigan taking action against sweepstakes casinos. Previously, Golden Hearts Games was instructed to halt its operations, and VGW announced a gradual cessation of its Michigan activities, aiming for a complete exit by February 1, 2024. This decision, driven by a desire to comply with regulations and avoid conflict with the MGCB, illustrates the cautious approach companies are taking in response to the evolving regulatory landscape. VGW’s phased withdrawal plan reflects the logistical challenges of discontinuing operations, especially given the unique token-based economy of sweepstakes casinos, where players can win and redeem tokens for real money prizes.

The Future of Sweepstakes Casinos in Michigan

The MGCB’s firm stance on sweepstakes casinos and related platforms highlights the ongoing tension between emerging online gambling models and traditional regulatory frameworks. As companies like VGW navigate the complexities of compliance and operational wind-down, the future of sweepstakes casinos in Michigan—and potentially beyond—remains uncertain. This situation underscores the need for clear regulatory guidelines and the potential for legislative developments to shape the industry’s trajectory.