VGW Holdings Exits Connecticut Amid Cease-and-Desist Order

The sweepstakes gaming industry faces intense scrutiny as VGW Holdings pulls out of Connecticut following a regulatory crackdown. The Connecticut Department of Consumer Protection has ordered the leading sweepstakes operator to cease operations, citing unlicensed gambling. With increasing pressure on sweepstakes gaming, operators now face a shifting landscape of compliance and regulatory challenges. Discover how VGW’s exit from Connecticut signals a turning point for sweepstakes operators across the US.

VGW Exits Connecticut After Cease-and-Desist, Highlights Regulatory Pressure on Sweepstakes Operators

VGW Holdings, a major player in the sweepstakes gaming industry, has ceased operations in Connecticut following an order from the state’s Department of Consumer Protection. The department sent a cease-and-desist letter in February 2024, accusing VGW of conducting unlicensed gambling in violation of Connecticut law. This order reflects the mounting regulatory scrutiny facing sweepstakes operators across the US.

The letter directed VGW to “immediately cease and desist” offering its games and services, including its popular Chumba Casino and Luckyland Slots brands, to customers in Connecticut. It also warned of possible civil penalties under the Connecticut Unfair Trade Practices Act (CUTPA) and criminal penalties under Conn. Gen. Stat. 53-278b and 53-278d for non-compliance. The state further alleged that VGW’s promotion of “unlicensed and illegal gambling services” constituted an unfair trade practice.

Instead of challenging the order, VGW has opted to withdraw from Connecticut entirely, as noted by gaming lawyer Daniel Wallach in a post on social media platform X. The company’s updated terms and conditions reflect its new list of barred jurisdictions, which now includes Connecticut, along with Montana, Idaho, Michigan, Washington, and Quebec. This decision underscores the growing pressure on sweepstakes operators to comply with diverse and often stringent state regulations.

VGW’s regulatory troubles are not confined to Connecticut. In January, the Michigan Gaming Control Board also issued a cease-and-desist order to VGW, along with several other sweepstakes operators, intensifying the industry’s regulatory challenges. Despite these setbacks, VGW continues to operate in other markets, including Delaware, even though it reportedly received a similar cease-and-desist letter from the Delaware Division of Gaming Enforcement in February 2023. This situation highlights the complexities of enforcement and compliance in the fragmented landscape of US gambling regulation.

While VGW remains one of the largest sweepstakes-based casino operators in the US, other industry players are feeling the heat. The American Gaming Association (AGA) issued a memo in August 2024 calling for a crackdown on sweepstakes-based gaming offerings. The AGA urged state attorneys general and regulators to investigate these businesses to ensure they comply with existing laws.

Amid this heightened scrutiny, the sweepstakes industry has taken proactive steps to self-regulate. Last month, the industry launched its own trade body, the Social and Promotional Gaming Association, which includes several leading social and sweepstakes gaming businesses. However, notably absent from this organization is VGW, despite being at the forefront of regulatory and media attention. This absence suggests a cautious stance by VGW, possibly as it navigates ongoing regulatory challenges.

The pressure on sweepstakes operators is compounded by reports of business practices that have drawn further criticism. For example, NEXT.io recently reported that Sweepslots operator Regal Technologies was allegedly failing to pay affiliates over $1 million in first-time purchaser deals. Such controversies only amplify calls for stricter regulation within the industry.

VGW’s withdrawal from Connecticut and other jurisdictions signals a broader shift in the US sweepstakes gaming landscape. Increased regulatory pressure has made it clear that operators must adhere strictly to state and federal gambling laws or risk losing access to key markets.

VGW Holdings’ exit from Connecticut following the cease-and-desist order highlights the growing regulatory challenges faced by sweepstakes operators in the US. As states intensify their scrutiny of unlicensed gambling activities, operators like VGW must adapt to an evolving regulatory environment. While the launch of the Social and Promotional Gaming Association suggests an effort by the industry to self-regulate, the absence of key players like VGW raises questions about the future direction of the market. As the industry braces for more crackdowns, compliance and responsible gaming practices will be crucial for long-term success.