Michigan Sets Precedent With Social Online Casinos That New York Could Follow

Written By Dan Holmes on November 19, 2023
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A decision by Virtual Gaming Worlds to remove its social casino app from the Michigan market has gaming industry observers speculating on the future of such products. Ardent regulation in New York has kept many such social casinos from the state. But that may not always be the case.

For some consumers who are not ready to dive into online betting, or who merely wish to dabble in iGaming in a more simple format, social casinos are a superb alternative. Some social casino apps have also been innovative with product offerings.

Many states, like New York, have yet to legalize online casinos, which means social casinos that exist on the margins of fantasy contests and casino gaming might be popular with consumers.

Given the fast growth of online betting in the US – and the record-setting pace of online New York sports betting, not to mention the potential legalization of NY online casinos – it’s understandable that social online casinos might try to make their way to the Empire State.

Oddly, for such a large state, New York policy-setters and regulators have not discussed social casinos much. PlayNY reached out to the New York State Gaming Commission for comment on this topic but have yet to receive a response.

How Michigan might affect New York social casinos

Just across Lake Erie, Michigan has drawn attention after Attorney General Dana Nessel ordered Golden Hearts Games, a social online casino, to cease operations in the state.

Such a decision comes as state lawmakers in Michigan – in every state, really – crack down on grey areas in gambling laws. In this instance, as social online casinos are not licensed by and do not pay taxes to the state of Michigan, Nessel determined the vertical represents a risk.

“Unlicensed gaming robs our schools and our government of essential funding and leaves consumers unprotected,” Nessel said in a September statement.

“When companies like Golden Hearts attempt to circumvent Michigan’s gaming laws, they create the false impression that their games are legal and safe for consumers. My office is committed to ensuring that our gaming laws are strictly enforced, and those who violate those laws are held accountable.

The order came on the heels of a two-year investigation by Michigan officials. But it also resulted in other social online casinos – namely VGW-owned Chumba Casino, LuckyLand Slots and Global Poker – to pull out of the state as well.

“VGW continually evaluates their business operations in the interests of all their stakeholders,” VGW said in a statement, “and after careful consideration, they have decided to take this course of action.”

Wait, what is a social casino?

A social online casino offers digital versions of popular table and slots games. Where they differ from legal online casinos: Social platforms do not deal in real currency. Rather, they use their own digital currencies that carry no monetary value. That said, customers can purchase digital currency and redeem it for real cash prizes.

However it is not required for users to purchase digital currency, like how online casinos and sportsbooks might require a deposit. In this regard, social online casinos are not operating a casino. The casinos are operating on a sweepstakes model as opposed to gambling.

At least that’s what proponents of the social casinos say.

Does New York prohibit social casinos?

Online casinos are not legal in New York. If they were, it would be the biggest market in the country, which is why Sen. Joe Addabbo continues to push for legalization.

New York’s gaming laws do not expressly forbid online casinos, but state regulations do not allow the licensing of such activity.

For now, the state has not made any rulings on social casino or sweepstakes-style casino apps, allowing the likes of Chumba NY, LuckyLand Slots NY and Global Poker NY to operate.

That is, until lawmakers and regulators step in.

Photo by Ted Shaffrey / AP Photo
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Dan Holmes

Dan Holmes is a freelance writer for PlayNY. An author of three books about sports, he previously worked for the National Baseball Hall of Fame and Major League Baseball. Dan enjoys writing, running and lemon bars. He lives near Lake Michigan with his daughters and usually has an orange cream soda nearby.

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