Tennessee’s Attorney General publicly disclosed the enforcement push in late December. The AG claimed that it sent nearly 40 sweepstakes operators cease and desist letters. The recipients either shut down the illicit components of their services or agreed to wind them down.
This enforcement push is important in the context of the new bill, as Tennessee is now seeking to build upon its reactive crackdown and create a more defined statute. Lawmakers appear to be closing the loopholes related to dual-currency casino-style games that have operated outside of licensed gambling channels.
What the Bill Does Beyond a Simple Ban
An online sweepstakes game under SB 2136 is characterized by its dual-currency nature and casino-style format with virtual coins or tokens usable for cash or other prizes. The bill covers online and mobile app-delivered games.
The proposal also goes after entities that promote or support these games. The violation is considered a matter of public health and safety, which is categorized as unfair or deceptive acts under Tennessee consumer protection law.
At the same time, SB 2136 maintains carve-outs for legal gaming in Tennessee. These include the state lottery, sports betting, fantasy sports, and legal nonprofit gaming.
The bill also expands sports betting regulation by extending investigations to include “licensees and other persons,” and defines the attorney general’s power to initiate proceedings for certain violations.
What to Watch Next
Next steps for the legislation include the Senate Bill 2136 proceeding to the full Senate. The companion bill, HB 1885, is set to be heard in the House Departments & Agencies subcommittee on March 3.
The key thing to watch for is not that Tennessee has an issue with sweepstakes casinos – that’s already been evident in the AG’s actions in December. What’s different now is that the state is trying to make the enforcement system easier to use, more inclusive in scope, and harder to challenge in court.
If the proposal succeeds in both houses, Tennessee might set an example for other states that are looking to move away from warnings and letters to litigation-ready enforcement.
