Interview With JustGamblers’ Magnus Boberg About the US Sweepstakes Casino Industry
We’re all familiar with online casinos, but there’s one niche in our industry that fewer people are familiar with. Today, we’re chatting about sweepstakes casinos, particularly in the United States, where they’ve become popular.
We have Magnus Boberg from JustGamblers, a performance marketing company that covers the sweepstakes casino industry in the US. As with all verticals within online gambling, sweepstakes casinos generally rely on affiliates to direct players to their platforms. JustGamblers are experts at doing that, so we’ll ask Magnus some questions to get more familiar with the sweepstakes industry, current and future.
Hi Magnus! Tell us about yourself and JustGamblers. How did you end up in the iGaming industry?
I’m Magnus Boberg, co-founder and Managing Director at JustGamblers and our parent company, JustMedia Ltd. I’ve worked in the iGaming industry for over a decade and have always held management positions in marketing, specifically SEO. Before JustGamblers, I worked at Evoke Gaming, MrGreen, and NetEnt. Quite early on, I met and worked with Tobias Alriksson, a guy with a similar but more technical background, and we later launched JustGamblers together. Later, we took on venture capital and gained strong backing from prominent executives and board professionals in the iGaming industry. Currently, our primary focus is the United States, where we’ve branched out to cover sweepstakes casinos alongside real money gambling verticals.
Today, we’ll be chatting a little about the sweepstakes industry. Can you tell us more about sweepstakes casinos? Many people find the concept rather vague.
The United States has a clear definition of gambling. It must meet three requirements: prize, chance, and consideration. A “prize” means that the winners are awarded something with tangible value. “Chance” means that winners are determined by chance. “Consideration” means that participants must make a cash purchase or invest considerable effort to participate. Sweepstakes casinos are free to play, and while cash purchases are available, they are optional and relate to virtual currencies used to play casino games. It’s summed up as being “no purchase necessary” and doesn’t equate to gambling per the legal definition.
A sweepstakes casino platform looks exactly like a regular online casino, and while cash can’t be won when playing, users can win a virtual currency called “sweepstakes coins”, which can be used to redeem gifts and cash prizes.
Why are sweepstakes casinos becoming so popular in the United States?
Since sports betting became available in 2018, online gambling has seen explosive growth. Most states have legalized betting, which has given people a taste of the thrill and entertainment. At the same time, only seven states have legalized online casinos. This means that many states have a high demand for online casino gaming. Only two states, Michigan and Washington, have banned sweepstakes casinos. Idaho also has a framework that makes it pointless to play. So, essentially, sweepstakes casinos are legally available in 47 states and can thrive in the absence of legal options for traditional online casinos.
How do sweepstakes casinos fit in with JustGamblers’ overall strategy?
More people in the US are playing in sweepstakes casinos than real-money online casinos, a huge market that we’d like to capitalize on. For most parts, sweepstakes casinos are identical to online casinos, so there’s a clear overlap with our core business, which is general online gambling. Unfortunately, since sweepstakes casinos operate under legal loopholes, there’s little to no regulatory oversight of the industry.
This leaves players, or consumers, essentially our readers, vulnerable to exploitation. This creates an ethical dilemma from an operational point of view. For us, the legal status makes it viable to market and inform consumers in applicable states, and we apply the same standards for sweepstakes gaming as we do for regular casino gaming.
Our testing methodologies and criteria remain the same, and our team put in the same time and effort. We produce evidence of personal testing with text, audio, and video of critical user flows, including using real money to access and test all features. We compile quantitative measurements and comparisons with available brands and discuss the benefits and drawbacks of brands, a holistic third-party representation of the available sweepstakes brands.
How do JustGamblers deal with the ethical concerns of sweepstakes casino gaming?
We see it as our responsibility, to be honest and transparent about what content we publish and brands we market. Our team have vast experience with regulated online casinos in the US, and we apply the same standards when reviewing and putting out recommendations for sweepstakes casinos. Very few brands receive the same ratings and recommendations as top real-money online casinos because they simply don’t match the operational and regulatory standards. We’re very clear about highlighting shortcomings and often call out operators of bad business practices that may be disadvantageous to players. In a fragmented and often unsafe environment, we simply make it very clear about what to expect and do our best to steer people away from bad actors. Sadly, few sweepstakes operators have taken a long-term approach. Predatory marketing and operational strategies are prevalent and have rightfully attracted attention and criticism from the regulated iGaming industry.
That’s a good approach. So, sweepstakes operators now have some eyes on them. What has happened so far from a legal point of view?
Legislators in Michigan came down hard on sweepstakes operators earlier this year. They served several cease and desist letters to companies, effectively forcing most out of the territory. In other states like Delaware and Kentucky, there have also been reports about cease and desist letters to large operators dating back to 2023. These states will likely clamp down soon. In Georgia and a couple of other states, there have been class-action lawsuits relating to sweepstakes operators providing illegal online gambling services.
It’s a storm brewing, and iGaming industry stakeholders are becoming involved. The other month, the American Gaming Organization stirred the pot when they openly called for a crackdown on the sweepstakes industry, which gained much traction in news outlets and social media feeds.
What’s your take on this? Are sweepstakes operators in trouble?
I expect it to continue until we see a legal framework for sweepstakes casinos in all jurisdictions in the next few years. This includes sports betting and poker sites operating under the sweepstakes model. At the same time, many states are expected to legalize online casinos during the same period. For a majority of sweepstakes operators, this development will kill their business. Some deserve to go out of business, while others that operate in line with real money online casinos could survive.
Take a brand like High 5 Casino. They’re part of the recently formed SPGA (Social and Promotional Games Association), have a minimum age of 21, have all the RG tools you can think of, and generally provide a safe platform. This brand could transition to a licensed real-money online casino with time. There are a couple of other operators that could survive as the legal conditions change, but most operators are in trouble when looking at their current growth and general business viability.
Sounds like a fair assessment. In other verticals, why is the “sweepstakes model” less common in sports betting?
If we look at real-money online gambling, the most lucrative vertical is online casinos. It’s where you have the highest margins and profitability. The same is true when considering the similarities in sweepstakes casinos and betting sites operating under the sweepstakes model. Also, as I mentioned earlier, legal sports betting sites are widely available in the US, so fewer people seek out sweepstakes betting sites. There’s simply less demand, meaning they’re less common compared to sweepstakes casinos.
What are the priorities at JustGamblers around sweepstakes betting sites?
We’re a for-profit business, so our priorities align with what’s most lucrative. We cover both but prioritize sweepstakes casinos. And if we get back into the ethical discussion, there’s also a need for greater responsibility in the area of sweepstakes casinos compared to sweepstakes sportsbooks. Online casinos are higher risk in terms of gambling problems compared to sports betting. It’s easier for operators to cause harm with sweepstakes casinos, so we also consider that aspect, our responsibility to inform players of bad actors and the dangers of casino-style gambling.
Looking beyond 2024, what’s your take on the future of sweepstakes casinos in the United States?
Regardless of business location, sweepstakes operators should check their postboxes regularly because legislators from all states will eventually issue cease and desist orders. I think all states will implement a framework that changes how operators operate today. It’s impossible to say how long this would take since there’s no typical time frame for passing new laws.
Traditionally, gambling-related bills are controversial and often convoluted, which slows down the process. In this case, particularly where states have legalized online casinos, there’s an incentive to act fast since sweepstakes casinos eat away at the profits of regulated businesses where tax revenue is lost. Even in states where online casinos are illegal, there’s a financial incentive to regulate the sweepstakes industry. There are also the social aspects, but I highlight the financial aspects because that’s, unfortunately, a bigger carrot in passing new bills.
