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In an early signal that online casino gambling may soon be legalized in Florida and placed under the exclusive control of the Seminole Tribe, the Florida Legislature has proposed a series of updates to Florida’s gambling laws that would effectively ban sweepstakes casinos and other online platforms that offer ‘casino-style’ gaming or sports wagering, while excluding those same activities when conducted pursuant to a tribal gaming compact. Over the course of four days in late February, five gaming bills – House Bills 953, 1017, and 1467, and Senate Bills 1404 and 1836 – were filed in advance of Florida’s 2025 legislative session.
Some of the major changes include proposed bans on internet gambling and internet sports wagering when not conducted pursuant to a tribal gaming compact, as well as a broadening of the definition of “slot machine” to include games that do not need to be played with real money. Unlike proposals filed in other states, Florida’s bills do not target online sweepstakes casinos by name, but, rather through their broad wording. For example, the proposed definition of “Internet Gambling” includes any game that “simulates casino-style gaming, including, but not limited to, slot machines, video poker, and table games” – which captures the offerings of many sweepstakes casinos. Likewise, the addition of the words “or other thing of value” in the definitions of both “Internet Gambling” and “Internet Sports Wagering” would seem to encompass the ‘dual-currency’ system utilized by many sweepstakes casinos.
Perpetual sweepstakes casinos likely violate Florida law
The proposed revisions leave little room for doubt over whether sweepstakes casinos would constitute prohibited “internet gambling” if these measures are enacted into law in Florida. But even if these changes are ultimately not approved by the Legislature, that doesn’t mean that online sweepstakes casinos are currently legal in Florida or that there’s any ambiguity or murkiness surrounding their legal status. To the contrary, already existing Florida law – aided by statutory amendments ushered in over a decade ago – establishes that the online sweepstakes casino business model would likely violate Florida’s established gambling laws.
1. “Limited and occasional” only
Promotional sweepstakes are regulated in Florida under Section 849.094, Florida Statutes. In 2013, the Florida Legislature amended Section 849.094 in response to the proliferation of Internet sweepstakes cafés that were offering real money ‘casino-style’ games under the guise of a ‘free’ sweepstakes to promote sales of prepaid phone cards or Internet access time.
To address this widespread problem which afflicted Florida and other states, the Legislature tightened the law (Sec. 849.094) to restrict chance-based sweepstakes promotions to those run by for-profit commercial entities on a “limited and occasional basis” for marketing and advertising purposes “incidental to . . . bona fide sales of consumer products or services.”
Play Puzzles & Games on Forbes
Chapter 2013-1, Florida Statutes – approved by the Legislature on April 4, 2013 and signed into law on April 10, 2013 – sets forth the legislative finding that “Section 849.094 . . . was enacted to regulate certain game promotions or sweepstakes conducted by for-profit commercial entities on a limited and occasional basis as an advertising and marketing tool and incidental to substantial bona fide sales of consumer products or services.” The legislative findings also state that Sec. 849.094 – an exception to the ban against lotteries – “is not intended to provide a vehicle for the establishment of places of ongoing gambling.”
This temporal restriction is also made clear on the website of the Florida Department of Agriculture and Consumer Services (the “FDACS”), the state agency which oversees game promotions and sweepstakes. On the “Game Promotions/Sweepstakes” section of the FDACS website, one of the “Frequently Asked Questions” is “Who can run a game promotion”?
The agency’s answer:
“A game promotion can only be operated by certain entities on a limited and occasional basis as an advertising or marketing tool in connection with and incidental to bona fide sales of consumer products or services, if no purchase is necessary to play.”
Even the application form used by the state agency makes crystal clear that a game promotion or sweepstakes must be of limited duration, as signified by the section entitled “Promotion Dates” which requires the applicant to supply both the “beginning” and “ending” dates.
A perpetual sweepstakes that uses a casino-themed business model (with casino-style games and casino-like payouts) seems fundamentally incompatible with the Florida statute’s “limited and occasional” restriction and expressed purpose of avoiding “ongoing gambling.”
As several Florida attorneys general have cautioned, “gambling activities may not be disguised as a ‘game promotion’ under the terms of section 849.094, Florida Statutes, in an effort to avoid the criminal sanctions attendant to violations of Florida’s gambling laws.”
2. The “slot machine” definition was expanded in 2013
In 2013, the Florida Legislature also updated the definition of “slot machine” in Section 849.16. Florida Statutes. Prior to 2013, Section 849.16’s definition of a “slot machine” was limited to the insertion of “money, coins, or other objects” into a “machine or device.” In 2013, the Legislature broadened the definition of “slot machine” to include any “system or networks of devices” activated by an “account number, code, or other . . . information.” This expanded definition easily encompasses online slots requiring the user to provide an account number or “information” (such as a credit card, user ID, password, name and address).
As part of the same amendment, the Florida Legislature clarified in Section 849.16(1)(b) that a prohibited “slot machine” also encompasses any “system or networks of devices” that allow users to “[s]ecure additional chances or rights to use such machine, apparatus, or device, even though the device or system may be available for free play.” Thus, a prohibited “slot machine” under Section 849.16 now includes free-to-play games. (See Final Bill Analysis, Bill No. CS/HB 155, Florida House of Representatives, Apr. 19, 2013, at p. 11 [“The bill clarifies that a device is a prohibited slot machine regardless of whether . . . . it is available for free play.”]).
Under Florida’s amended law – which became effective in 2013 – the virtual slot machine-style games found on many social sweepstakes casino websites clearly fall within the broad reach of Section 849.16’s definition of a “slot machine.” No longer confined to “machines or devices,” the updated Florida statutory definition seemingly extends to any internet-based “system” that can be activated through a log-in rather than by the insertion of money.
Moreover, the updated definition makes clear that a prohibited slot machine under Section 849.16 now includes ‘free-to-play’ games that simulate games of chance and award something of value – which, in this case, are digital coins which can be used for extended game play (i.e., “additional chances or rights to use such machine”) – language which is now part of the amended statute in subsection (1)(b) – or redeemed for cash and cash equivalents.
3. The low threshold for ‘consideration’ under Florida law
But it’s the element of payment, also known as “consideration,” that’s the weak link for most sweepstakes casinos. Whether a sweepstakes constitutes an illegal lottery will often hinge on whether the purchaser of the product furnishes any amount of consideration for the privilege of participating in the sweepstakes. In Florida, a lottery consists of three essential elements: prize, chance, and consideration. Sweepstakes (which are typically random drawings for prizes) possess two of the three characteristics of a lottery: chance and a prize. Therefore, to avoid classification as an illegal lottery, a sweepstakes must not involve any consideration.
Sweepstakes casinos attempt to sidestep the element of consideration by using a two-tiered system of virtual coins. The first type of virtual currency – called “Gold Coins” – can be used to play ‘casino-style’ games (such as slots, roulette, blackjack and poker) in a “standard mode” with no potential for redeeming any prizes. The second type of virtual currency – typically called “Sweeps Coins” – can be used to play the same games in a “promotional sweepstakes mode,” where they carry real monetary value and can be redeemed for prizes and money.
While there are several ways for players to receive Sweeps Coins for free, the most common way to obtain Sweeps Coins beyond a nominal amount is by purchasing Gold Coins. The more Gold Coins that a player purchases, the more Sweeps Coins the player also receives. Critically, the number of Sweeps Coins received as a free “bonus” corresponds with the amount of real money spent. There is essentially a 1:1 correlation between the number of dollars spent and the number of Sweeps Coins provided in each purchase. The same rate of exchange applies when it’s time to cash out as well. Sweeps Coins are redeemable at a conversion rate of 1:1.
Courts throughout the country have repeatedly seen through this subterfuge. For example, in Telesweeps of Butler Valley, Inc. v. Kelley, a Pennsylvania federal district court held that the purchase of a long-distance telephone card that came with a commensurate number of free entries to participate in a ‘casino-style’ sweepstakes game constituted “indirect consideration” to participate in the sweepstakes, even though (like here) no purchase was necessary and several alternative methods of free entry were available. In rejecting the defendant’s argument that the customer was simply paying for telephone time and not the sweepstakes entries, the Court declared that “plaintiff’s attempt to separate the consideration from the chance to win by inserting a step between the two elements is clever, but it merely elevates form over substance. At bottom, what Telesweeps is doing constitutes gambling.”
As the Ohio Court of Appeals explained in Cleveland v. Thorne, “the justice system is not some lumbering oaf who must ignore the patently obvious gambling scheme apparent here simply because of a contrived separation between consideration and the scheme of chance.” The appellate court added that “there is no justification for ignoring the nature of the transaction simply because the system is designed in such a way as to artificially isolate one part of the illegal transaction from another. The justice system is not so blinded by chicanery.”
The case law in California on the issue of “consideration” is also instructive. Courts there have long ruled that when cash spent ties straight to sweepstakes entries for ‘casino-style’ games, it’s gambling, regardless of whether there are free alternative methods of entry. In each one of those cases, just like here, there was a direct correlation between the amount of money spent and the number of “sweepstakes points” received to play casino-style games for cash prizes.
For example, in People ex rel. Green v. Grewal, the defendants promoted the sale of Internet access time and other products with a “sweepstakes” giveaway, wherein the defendants provided customers with 100 “sweepstakes points” for each dollar spent, which could then be used to play ‘casino-style’ games of chance for cash prizes at computer terminals provided at defendants’ Internet cafés. (The “sweepstakes points” were redeemable at a rate of one dollar per 100 points — in other words, a 1:1 ratio of “money in” and “money out”). The defendants denied that the operation involved illegal gambling because they were only selling computer time, and that the sweepstakes games were “not gambling” but instead a “promotional game.”
In upholding the lower court’s injunction, the California Supreme Court explained that the existence of consideration will be found “where a connection exists between purchasing a product and being given chances to win a prize.” Quoting several prior California appellate court decisions, the Grewal Court explained that “‘[o]nce the element[s] of chance [and prize]’ are added to a vending machine or device, it is reasonable to assume that ‘people are no longer paying just for the product regardless of the value given that product by the vender.’” “That is the case here as well,” the Supreme Court concluded, “since points are given to play the computer sweepstakes games on defendants’ terminals based on dollars spent in purchasing products – that is, the elements of chance and prize are added to the purchase.”
Similarly, in Lucky Bob’s Internet Café, LLC v. California Dep’t of Justice, a California federal district court found consideration to exist where customers were given 100 free entries to a “sweepstakes” for every $1 of purchased internet time and played casino-style games of chance to find out whether they won a prize. The fact that customers could also obtain free entries without a purchase did not change the result. Citing prior California appellate court rulings, the court held that “the consideration element is satisfied when some customers by chance receive more than what they paid for. . . . Once the elements of chance and prizes are added, the consideration paid is no longer solely for internet time. Paying for the chance to win money, rather than the use of Internet time, may be the customer’s main focus.”
Florida takes an even broader view of the consideration element. In a 1998 advisory opinion (AGO 98-07), the Florida Attorney General concluded that a vending machine which dispensed a telephone calling card with an attached sweepstakes game ticket that awarded prizes by chance constituted an illegal lottery pursuant to Section 849.09, Florida Statutes, even though a player could obtain a game ticket for free by mailing in a request form.
The Florida Attorney General reaffirmed the validity of that ruling in a 2007 advisory opinion involving several local business establishments that conducted a “Calling Card Sweepstakes.” Briefly, the game operated by awarding sweepstakes entries when purchasing long distance telephone time on a calling card. (Free entries could also be obtained by submitting an entry form based on the rules of entry). For each dollar spent on the services, the purchaser received a corresponding number of free sweepstakes points which could be used to play games of chance for cash prizes on computer terminals provided at the defendants’ Internet cafés. The Attorney General concluded in AGO 2007-48 that this scheme was an illegal lottery pursuant to Section 849.09, noting that it was “substantially similar” to the sweepstakes operation at issue in AGO 98-07 and “appears to suffer from the same difficulties.”
Crucially, these opinions found that a sweepstakes promotion tied to a game of chance (such as a ‘casino-style’ game) rendered the transaction an illegal lottery even though a product was attached to the transaction and free entries could be obtained by sending in a request form.
This aligns with the Florida Supreme Court’s analysis in Little River Theatre Corp. v. State ex rel. Hodge, where the Supreme Court adopted the view that any benefit to the game promoter constitutes consideration. Thus, even if players do not pay to participate in the sweepstakes, it can still be an illegal lottery. As the Court explained: “while the patrons may not pay, and the [businesses] may not receive any direct consideration, there is an indirect consideration paid and received. The fact that prizes of more or less value are to be distributed will attract persons to the theaters who would not otherwise attend. In this manner those obtaining prizes pay consideration for them, and the theaters reap a direct financial benefit.”
Here, too, the sweepstakes casino operator receives an indirect benefit through increased visitation to its website – with many site visitors subsequently purchasing a product (i.e., Gold Coins) and receiving a nearly 1:1 dollar equivalent amount of Sweeps Coins that can be used to play ‘casino-style’ games (such as virtual slot machines) for cash prizes. The insertion of a ‘product’ – even if sold at fair market value – and several supposed alternative methods of free entry cannot conceal what appears in substance to be an obvious gambling transaction.
4. Circumvention of the $5,000 reporting and disclosure threshold
Section 849.094 requires those operating sweepstakes with total prizes worth more than $5,000 to comply with various registration, disclosure, and bonding requirements. If the total value of all prizes exceeds $5,000, the operator must: (1) file with state officials a copy of the game rules and a list of all prizes offered at least 7 days before the game promotion begins; (2) post a surety bond or open a trust account at a national or state-chartered financial institution, with a balance sufficient to pay the total value of all prizes offered; and (3) provide state officials with a certified list of the names and addresses of all persons, whether from Florida or from another state, who have won prizes which have a value of more than $25 and the dates when the prizes were won within 60 days after such winners have been determined.
To avoid these requirements, many sweepstakes casino operators include language in their terms of use capping prizes to Florida residents at $5,000. However, the $5,000 statutory threshold is not triggered by the payout amount, but, rather, by the “total announced value” of “the prizes offered,” which infers the “aggregate” amount of all prizes. Indeed, the statute makes several references to the “total value” of “all” prizes offered. That’s the only logical way to read the plain language. Otherwise, you end up with absurd results such as a local bakery having to register for running a one-time $6,000 giveaway, but a perpetually operating sweepstakes casino making multiple $5,000 payouts somehow avoiding that requirement.
Further evidence that the $5,000 threshold is not on a “per-winner” basis but rather is the sum total of all prizes offered can be found in Section 849.094(5), which requires operators to provide a certified list of all persons who won prizes “which have a value of more than $25.” For sweepstakes operators who are offering casino-style games over the Internet in the third most populous state – a state which, notably, has not yet legalized online casino gambling – the suggestion that they are offering only $5,000 in total prizes strains all credulity. This obfuscation of the “total value” of “all prizes offered” – what else can it be? – simply to avoid having to comply with Sec. 849.094’s disclosure, reporting and bonding obligations deprives Florida residents of important consumer protections that go to the very core of the statute.
Potential claims and remedies under Florida law
To combat the misuse of Florida’s sweepstakes statute, the 2013 amendments to Section 849.094, Florida Statutes, added a new subparagraph (11), which provides that a violation of the sweepstakes law constitutes a deceptive and unfair trade practice actionable under Florida’s Deceptive and Unfair Trade Practices Act. Such lawsuits can be brought by the Office of the Attorney General, Department of Legal Affairs, as an “enforcing authority” under FDUTPA, or by any person “who has suffered a loss as a result of a violation” of the statute.
The Florida Attorney General’s Office has a vast arsenal of remedies at its disposal to combat illegal sweepstakes businesses. Under the FDUTPA, the Attorney General’s Office can obtain, among other remedies, (i) injunctive relief; (ii) a sequestration or freezing of assets; (iii) reimbursement to consumers found to have been damaged; (iv) divestiture of a defendant’s ownership interest in the business; and (v) dissolution of the business. And, in a case filed in December, the Attorney General’s Office sued the operators of several illegal sweepstakes gambling businesses under a state-law racketeering theory. The remedies available under Florida’s RICO statute include injunctive relief, divestiture, dissolution, and treble damages.
In addition to these remedies, Florida’s gambling laws – contained in Chapter 849 of the Florida Statutes – provide for the forfeiture of all monies connected to illegal gambling. In that regard, Section 849.12 provides that “[a]ll sums of money . . . used in connection with any illegal gambling . . . shall be forfeited, and may be recovered by civil proceedings . . . to be brought by the Department of Legal Affairs . . . in the name and on behalf of the state.”
Among the claims that can potentially be raised:
Sec. 849.08 – Unauthorized “casino-style” games
Sec. 849.09(1)(a) – Illegal lottery
Sec. 849.09(1)(d) & (i) – Aiding & Abetting
Sec. 849.094 – Unlawful game promotion
Sec. 849.15 — Illegal slot machine
The unlawful game promotion claims would center on: (1) their “perpetual” duration; (2) falsely advertising that the games “do not involve real-money gambling” (which would be tied to subsection 2(d)’s prohibition against “false, deceptive, or misleading” advertising in connection with game promotions); and (3) failing to comply with the statute’s registration and disclosure requirements for sweepstakes with total announced prizes of over $5,000.
Florida also has expansive ‘aiding-and-abetting’ provisions that can reach financial intermediaries such as banks and payment processors. Pursuant to Section 849.09(1)(d), the criminal offense of aiding and abetting an illegal lottery applies not just to persons who set up, promote or conduct the lottery, but also to those “interested in” or “connected in any way with” the lottery. In addition, Section 849.29 states that any person who has an “interest in” a gambling transaction as a “backer”, “vendor” or “otherwise” is “jointly and severally liable” and just as subject to being sued for illegal gambling transactions as the gambling operator.
Section 849.29 was recently invoked against a payment processor in Knapp v. VGW Holdings Ltd., a class action lawsuit filed in Florida last year and transferred to Delaware federal court in February. The complaint alleged that Worldpay Inc. was “jointly and severally liable” under Section 849.29 for the gambling losses sustained by plaintiff and other class members because it had acted as a “backer,” “vendor,” or “otherwise” in processing payments for VGW and therefore had an interest in the illegal gambling transactions of VGW. This claim was recently dismissed on jurisdictional grounds and will likely be refiled in the Delaware court.
The “aiding and abetting” provisions of Chapter 849 provide a powerful and far-reaching enforcement tool. Based on the broad language in Sec. 849.09(1)(d) (“connected in any way with”) and Sec. 849.29 (“backer,” “vendor,” or “otherwise”), the entire sweepstakes casino supply chain may be at risk. Potential targets could include banks, payment processors, geolocation providers, game suppliers, platform providers, affiliates, and even investors. It is noteworthy that the Florida Attorney General’s Office used the “aiding and abetting” provisions of Section 849.09 to bring criminal charges against individuals who provided material assistance to internet sweepstakes cafés in the early 2010’s. Those targeted included legal counsel – a grim reminder of the long reach of Florida’s aiding and abetting provisions.
Heightened risk of enforcement in Florida
Florida is an obvious high-risk state for sweepstakes casino operators and their suppliers. In my estimation, Florida poses the highest enforcement threat risk level in the entire country, even more so than California (which is quickly becoming a legal hotspot for sweepstakes casinos). To begin with, the Florida Constitution ensures that Florida voters (and only Florida voters) can decide whether to allow casino gambling in the State. This constitutional right is exclusive to Florida voters and ensures that casino gambling in Florida (outside of tribal lands) can only be approved by a citizens’ initiative (i.e., a statewide voter referendum).
On three separate occasions, Florida voters have rejected referenda which would have legalized casino gambling – and none garnered more than 39% approval. In 1986, the Florida electorate approved the creation of the State Lottery by a 2-to-1 margin but rejected casino gambling by the same margin. In 2018, Florida voters approved Amendment 3 – which nullified the legislature’s authority to approve casino gambling – by a 71%-to-29% margin.
Florida is also one of the most aggressive states in tackling the ongoing problem of Internet sweepstakes cafés – the forerunner to sweepstakes casinos (which employ a similar business model and, according to media reports and recently-unearthed public filings, may have been “modeled” after their brick-and-mortar predecessors). In 2013, Florida updated its gambling laws to prohibit this business model, and has dramatically stepped up law enforcement efforts in recent years to dismantle their operations. Since 2022, more than 2,000 illegal slot machines and $4.3 million in illicit funds have been seized by law enforcement authorities.
Likewise, the Florida Gaming Control Commission (the “FGCC”) has been very proactive in enforcing Florida’s gambling laws – especially in the online gaming space. In 2023, the FGCC sent cease-and-desist letters to three daily fantasy sports companies for allegedly accepting bets and wagers and promoting an illegal lottery in violation of several Florida laws. If the FGCC would take such an aggressive stance against companies which are licensed in other U.S. jurisdictions, it will be unsparing with businesses that have no licenses and offer a product whose legality is less debatable and poses a bigger threat to statewide interests.
That has proven to be the case. Earlier this year, the FGCC sent cease-and-desist letters to three offshore bookmakers and casinos to halt their illegal online gambling operations in Florida. Presaging a possible future targeting of sweepstakes casinos, the FGCC’s February 3rd letter accused each offshore company of offering “wagers on casino-style games, including slots, poker, blackjack, roulette, craps, and baccarat” and “allow[ing] Florida residents to participate in illegal lotteries,” in violation of Sections 849.08 and 849.09. The FGCC’s letter also highlighted the revenue-sharing provisions of Florida’s gaming compact with the Seminole Tribe, noting that such revenues – which are contingent on the Tribe having statewide exclusivity over most forms of gaming – “are used to fund valuable state programs.”
State’s economic incentive to pursue litigation
Which brings us to the Seminole Tribe, the State’s most powerful gaming stakeholder. Its 2021 compact with the State of Florida grants it statewide exclusivity over sports betting and substantial exclusivity over casino-style games. In return, the State receives a percentage of the revenues derived from tribal-operated gaming. In the first six months of 2024, the Seminole Tribe paid more than $357 million to the State under their revenue-sharing deal.
The proliferation of online sweepstakes casinos poses an obvious competitive threat to the Seminole Tribe, whose casino-style games are land-based only. Less revenue potential for the Tribe means less for the State too. With billions at stake, do you expect them to sit idly by?
The answer is probably not. The more likely scenario is the State taking legal action, perhaps initially through cease-and-desist letters issued by the Florida Gaming Control Commission, and, if those fail to achieve the desired result, then through civil lawsuits filed by the Florida Attorney General’s Office seeking disgorgement of profits, restitution, and injunctive relief.
While passage of the proposed gaming reforms by the Florida Legislature is probably the preferred scenario for the Seminole Tribe – as it would further codify their digital gaming monopoly and likely cause most (if not all) sweepstakes casino operators to exclude Florida residents from their ‘casino-style’ games on a going forward basis – it is not the only means by which the Seminole Tribe and the State can protect their economic interests. Even if the proposed legislation fails, existing law in my view already prohibits online sweepstakes casinos from operating in Florida – leaving the State with a panoply of powerful legal options.
