A new type of online casino has been gaining popularity, claiming to be 'free and legal' in most US states. But what sets it apart from traditional crypto casinos? The answer lies in a specific consumer-promotion law and a two-token accounting system.
Unlike crypto casinos, which allow users to stake a coin with cash value and win a coin with cash value, sweepstakes casinos claim to avoid the definition of gambling by removing one key component: consideration. Instead of buying tokens directly, users can receive them as promotional bonuses or through a free-entry channel.
The two-token system used in sweepstakes casinos is designed to keep money flow and prize flow separate. One currency is a 'pure play token' that has no cash-out value, while the other is a promotional token that can be redeemed for prizes after clearing certain requirements.
This design allows sweepstakes casinos to operate under US consumer-promotion law, which requires a free-entry path to exist alongside paid options. However, critics argue that this model is functionally equivalent to traditional gambling and that regulators will eventually crack down on it.