Golden Hearts Games (GHG) was likely forced out because it violated state rules on charitable gaming, while, Virtual Gaming Worlds (VGW) probably left out of an abundance of caution.

Regulators tend to pay closer attention when companies say there’s a charitable aspect. Cohen, who leads the firm’s Data Privacy & Cyber Security group — which advises clients on sweepstakes and contests, among other things — said that when she first learned GHG was ordered out of Michigan, she figured it may have been because it’s a small company without a lot of resources.

“They may have just made a business decision that they did not want to expend the resources to fight it out with the regulator, and it was better to enter into an agreement of assurance and leave the state,” Cohen said.

But GHG also had a rare charitable component on its platform.

“I originally thought that that may have raised the interest of the regulator there because they had a charitable aspect,” Cohen said. “But that said, I understand now that Chumba Casino is also leaving Michigan, and as far as I know, they don’t have a charitable aspect.”

According to Cohen, while it’s not illegal for a real money sweepstakes casino in the US to say that a percentage of its sales go toward a non-profit or a charity, they are still heavily regulated.

“When you incorporate a charitable or giving aspect, that does tend to get attention from regulators because there are some that will say there’s some charitable aspect when the charity is not getting all the funds,” she said. “Regulators tend to pay closer attention when companies say there’s a charitable aspect.”

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Varied Interpretation of Gaming Laws

Laws governing sweepstakes — and, therefore, sweepstakes casinos — have been around for decades. Sweepstakes are not considered gambling if they offer some legitimate purpose and allow some (or all) participants to play for free.

But Michigan also has an igaming law, which means sweeps need to be properly licensed by the state.

“In terms of some companies closing down because of the charitable component, the only one I know of is GHG — so I think that’s a red herring,” Cohen said. “That’s not necessarily the focus of state law.

“There’s been a number of states where the way that their sweepstakes laws are written or interpreted, the companies may have been advised not to offer service there, even in the past. Whatever a company does, I think, depends on its sense of risk management, what their advice has been from counsel, how much business or interest they have from people in the state, etc.”

Washington is one such state. Idaho is another. And it appears that Michigan will be yet another — especially considering the Michigan Gaming Control Board (MGCB) has also forced out prop-style DFS wagering.

“There are some states where, if you’re awarded additional free play, which happens on most of these sites, that can be considered either a prize or a consideration,” Cohen said. “That can push a company into the definition of gambling.”

Learn more about real money online casinos in Michigan in our complete guide.

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