Thursday’s announcement did not indicate that any of the companies had been issued fines for the violations. The regulator did say that the three 'have each taken steps to prevent Michigan residents from gambling on their websites.’
Michigan regulators said they sent cease-and-desist letters to three gaming companies, including two that operate popular sweepstakes casinos Stake.us and Chumba Casino, since October.
The news is disappointing since sweepstakes casinos are an increasingly popular choice for players and are perfectly legal in most states. It’s also worrisome news, as the industry certainly doesn’t want other states to follow Michigan’s lead and consider sweepstakes to be an illegal form of gambling.
But that’s precisely what the Michigan Gaming Control Board (MGCB) told Stake.us and Virtual Gaming Worlds (VGW) in letters the regulator sent last year. MGCB also sent a similar letter to PredictionStrike, a fantasy sports betting platform that functions like a stock exchange.
Stake.us is a social gaming platform that uses crypto for gaming transactions. Meanwhile, VGW operates Global Poker, Chumba Casino, Luckyland Slots, and VGW Play.
“Gambling regulations are in place for a reason, and illegal gambling operations are not welcome in Michigan,” MGCB Executive Director Henry Williams said in a statement Thursday.
“We do not want businesses who skirt the law having access to Michigan citizens and leaving them vulnerable because they are playing on unregulated sites that leave them with no recourse, and that siphon funds away from communities because they are not paying taxes like a regulated, legal gambling establishment would.”
The regulator said Stake.us had violated Michigan law by “promoting an unlicensed online lottery and/or raffle for customers that buy its products through its internet website.” According to MGCB, a cease-and-desist letter was sent to the operator’s parent company in Cyprus on November 2, 2023.
Australia-based VGW had conducted “illegal gambling by offering an internet game in which a player wagers something of monetary value for the opportunity to win something of monetary value,” MGCB said. A letter to that effect was, according to the regulator, sent to VGW’s offices in San Francisco on December 5, 2023.
MGCB said New York-based PredictionStrike ran afoul of state law when it offered “internet gaming and internet sports betting in Michigan without being licensed in the state as an internet gaming operator and a sports betting operator.” A letter was sent on October 19, 2023.
Thursday’s announcement did not indicate that any of the companies had been issued fines for the violations. The regulator did say that the three “have each taken steps to prevent Michigan residents from gambling on their websites.”
Michigan Cracking Down Since September
This isn’t the first time that authorities in Michigan have pursued sweepstakes casinos.
Golden Hearts Games (GHG) was ordered to cease operations by AG Dana Nessel in mid-September. GHG may have run afoul of state laws that cover charitable gaming.
The next month, VGW announced that it would start winding down its operations in Michigan, with a goal of being completely out of the state by February 1, 2024. VGW appeared motivated to leave out of an abundance of caution and to avoid tangling with the regulator.
VGW elected to take down its operations piecemeal due to the vast number of tokens still in circulation. Under the sweepstakes model that underpins Global Poker and other social gaming sites, players purchase the equivalent of play-money tokens (aka Gold Coins) and, as a gift, they receive a second type of token (aka Sweeps Coins).
While both tokens can be used separately to play casino-style games and poker, only Sweeps Coins can be redeemed for real money prizes. Players can win more Sweeps Coins and eventually redeem them for cash prizes. The exact terminology for the tokens varies for each social gaming site, but their purpose is the same.
Michigan online poker players on Global Poker have been unable to purchase Gold Coins since November 1. They were allowed to continue playing, using any Gold Coins or Sweeps Coins in their accounts, until December 1. VGW stopped accepting mail-in requests for Sweeps Coins on December 1.
VGW had said players would be able to redeem any Sweeps Coins won before December 1 for prizes up until February 1, 2024. It’s unclear if the cease-and-desist letter issued by the MGCB will alter those plans.
