Virtual Gaming Worlds Leaving Michigan Market
Virtual Gaming Worlds (VGW) has announced its decision to withdraw its online social gaming platforms, Chumba Casino, Luckyland Slots, and Global Poker, from the Michigan market.
This decision comes as the state has begun taking a more aggressive regulatory stance towards forms of online gambling outside of regulated Michigan online casinos.
Chumba, Luckyland, and Global Poker will stop letting Michigan players purchase their digital credits, which are needed in order to play the games, from November 1. Existing customers can play through their sweepstake balance until December 1, and then withdraw any remaining prizes until February 1, 2024.
Regulated gambling is now big business in Michigan, with online casinos’ revenues up nearly 30% year on year for September, at $166 million. This being the case, VGW might feel that the potential heat is not worth it anymore with the increased competion.
“While we are disappointed our players in Michigan will no longer be able to play our highly-rated social games, we always consider the interests of all of our stakeholders and remain focused on VGW’s strong long-term outlook,” said a VGW spokesperson.
Questions for the Sweepstakes Model
Chumba Casino, Luckyland Slots, and Global Poker operate on a sweepstakes social casino model.
This model allows players to purchase play money chips and receive bonus Sweeps Coins, which can then be used to play games and potentially win more Sweeps Coins. These Sweeps Coins can be redeemed for cash prizes. While this model technically qualifies as social casino gaming and not real money gambling, it has come under scrutiny from regulators in Michigan.
The Michigan Gaming Control Board (MGCB) has been cracking down on unregulated online gambling, and recently forced Golden Heart Games, another sweepstakes social casino, to leave the state. Michigan Attorney General Dana Nessel stated that unlicensed gaming deprives the state of essential funding and leaves consumers unprotected.
With increased regulatory pressure and competition, staying to defend its market position against much simpler-to-understand actual online casinos and potential regulatory challenges was clearly too much for VGW.
The operator has not commented on whether it plans to pull these social casino services from any other state.
Wider Picture
Sweepstakes casinos are a popular and profitable business in their own right. VGW makes hundreds of millions a year, currently sponsors Ferrari’s racing team, and the sector is still a huge market.
However, regulators do sporadically crack down on them, or they sometimes face class action lawsuits from losing players. In 2023 so far, two high-profile cases include a $5 million suit against social sportsbook Fliff and the $419 million settlement paid out by International Game Technology and its one-time social casino subsidiary, DoubleDown.
Michigan has also been one of many states to clamp down on Daily Fantasy Sports operators offering Pick ‘Em Games, which they say are too close to regulated Michigan online sports betting.
Regulators for New York sports betting recently clarified their ban on the form of wagering, as did the Massachusetts’s Gaming Control Board. Lawmakers in Maine took that one step further and fined operator Underdog Sports $320k for previously offering the sports betting type games.
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