Will Connecticut suspension of High 5 Games have spillover effect in other states?
On the eve of March Madness, the Connecticut Department of Consumer Protection (DCP) dropped a bombshell last week in its fight against illegal sweepstakes operators.
Weeks after High 5 Casino vowed to discontinue service in Connecticut, the DCP issued an eight-page summary suspension on 14 March against High 5 Games, a social casino operator. While High 5 Games offers licensed gaming products across Connecticut, High 5 Casino is not licensed by the state.
Since the March 2023 sweepstakes launch of High 5 Casino in Connecticut, approximately 1,065 customers made at least $3.1 million (£2.4 million/€2.38 million) in deposits, the state agency’s investigation found.
On the basis of the findings, the state issued 1,065 criminal charges against High 5 Games for illegal gambling activity. The complaint appears to be the first time a US sweepstakes casino has faced criminal charges.
An online sweepstakes game is generally defined as one in which a prize is awarded based on chance, available on the internet and accessible on a mobile phone, computer terminal or similar access device. In total, the High 5 customers lost roughly $937,598, the probe determined.
Other states looking into it
As igaming proliferates, a wave of states are considering legislation that would restrict sweepstakes gambling. As igaming operators shower the March Madness airwaves with ads, the industry waits to see if other states follow Connecticut. At least six other jurisdictions have active legislation that targets sweep providers. One is New York. There state senator Joseph Addabbo is champing at the bit to bring legal igaming to the Empire State.
When a company engages in illegal activity in another state that also “violates” New York standards, New York officials typically monitor the activity, Addabbo told iGB this week. As it relates to High 5, it is “somewhat unfair” that the company appears to be offering both licensed and unregulated products simultaneously, he emphasised.
Rather than companies acting ethically by abstaining from the unregulated market, Addabbo bemoaned the ease with which operators like High 5 can gain entry to a market unfettered from strict requirements.
Founded in 1995, High 5 Games LLC is a limited liability company registered in Delaware. From an online perspective, High 5 Games offers a wide suite of slot products. Among them are popular options such as Sonic 77 Sevens and Lootapalooza.
High 5 Games has been licensed as a supplier in Connecticut since 2021. It provides casino games to two licensed clients in the state. High 5 offers the licensed gaming content through FanDuel and DraftKings, two of three legal gaming sites available statewide. Fanatics Sportsbook is also live through a partnership with the state lottery, but does not offer online casino. There is a distinction between the legal sites and High 5 Casino, an online platform not licensed in Connecticut.
Explaining the sweeps model
A sweeps site such as High 5 Casino offers “virtual coins”, which can be obtained free of charge. The sites also offer “virtual cash”, which can be redeemed for real-money prizes. High 5 Games operated as High 5 Casino until October 2022. At that time, it was transferred to High 5 Entertainment LLC, according to the DCP. Online casinos with the sweepstakes model offer various packages on sweep coins that essentially allow a player to bolster their cashable balance.
Some legislators worry the dual-currency model provides a backdoor for sweeps operators to enter a jurisdiction without undergoing regulatory scrutiny.
While investigating a separate licensee, the DCP gathered evidence of High 5 Casino’s Connecticut operations in January. As part of the investigation, the division opened a customer account at High 5 Casino on 10 January 2025.
The DCP received an email from High 5 Casino on 18 February that it planned to discontinue service in Connecticut. On that date, the site restricted Connecticut residents from opening new player accounts, according to the email.
“We are disappointed that a licensed gaming service provider took advantage of Connecticut consumers by operating an illegal casino platform,” said Kris Gilman, who serves as gaming division director at DCP.
Quick sleuthing from the DCP demonstrated the ease with which a customer could bypass the guardrails that prevent illegal gambling. An investigator simply altered the location of the Google address associated with the account to Massachusetts. Without the requisite geolocation or Know Your Customer checks, users could still access the Connecticut site with a small change.
High 5 insists it wants to cooperate
Since the DCP suspended High 5 Games’ supplier licence last week, the company has stated it wants to work with Connecticut regulators to resolve the matter. Over High 5’s three-decade history as an established brand in the US, the company maintained, it has worked closely with regulatory agencies to “ensure responsible and transparent business practices”.
“We are committed to cooperating with Connecticut regulators to resolve this matter and maintain the integrity of our gaming licenses,” High 5 Games wrote in a statement.
Sign-up bonusing for new players underscores how online casinos can adroitly utilise the dual-currency model. New customers at High 5 Casino can claim up to 250 free “gold coins”, which can be used for entertainment purposes. Virtual or gold coins, however, cannot be redeemed for real-money prizes. The online casino also offers “sweeps coins”, which are redeemable but can also be used for free-to-play games.
When opening an account, a DCP investigator made a purchase of $8 worth of gold coins. The purchase was accompanied by a free bonus offer of $8 worth of sweep coins. Still, when he attempted a withdrawal, the investigator discovered at least one play-through would be required. The sweeps process also contains a minimum value requirement of $100 before the funds can be withdrawn.
High 5 Entertainment is a subsidiary of High 5 Games. The latter is a majority stakeholder, according to the DCP order.
Tip of the iceberg
In December, a contingent of leading state gaming legislators in the US convened for an industry conference in New Orleans. The three-day National Council of Legislators from Gaming States (NCLGS) 2024 Winter Meeting included a lively session on sweepstakes casinos. The ‘This Ain’t Your Granddad’s Sweepstakes’ panel addressed issues surrounding regulation, taxation and advertising across the market.
At the same conference, NCLGS board members spent a considerable amount of time discussing proposed model legislation on igaming. One provision calls for a blanket prohibition on sweepstakes games by participating states. Flagrant offenders may be subject to a fine of up to $100,000 for each violation. They also face the possible revocation of their gaming licence.
Shawn Fluharty, outgoing president of NCLGS, also serves as head of government affairs for Play’n GO, an online slot provider. Fluharty, a West Virginia delegate, notes that his state’s attorney general is actively pursuing potential remedies against illegal sweeps operators.
“This is just the beginning. States with legal igaming on the books are especially going to be active in cracking down on the black market,” Fluharty told iGB. The states are committed to protecting licensees and have the “statutory authority” to do so, he adds.
More strict rules needed?
On its website, High 5 Games lists a bevy of states where it is licensed, including igaming industry heavyweights New Jersey, Pennsylvania and Michigan. Last month, igaming gross receipts in Michigan totalled $222.5 million, more than quadruple the sports betting receipts of $46 million.
High 5 Casino’s catalogue of more than 1,700 slots includes at least 22 offerings from Evolution Gaming. Evolution has come under scrutiny for reportedly offering games in a slew of black markets. Among them are Iran, Sudan and Syria, according to Josimar, a Norwegian magazine. One option for prospective states is to insert language that would prevent a licensee from practising in the jurisdiction if the entity conducts business with an illegal offshore company.
“I think you have to be that strict,” Addabbo said. “For the safety of New Yorkers, I think we should take a hard stance.”
Addabbo, chairman of the New York senate racing, gaming and wagering committee, introduced a bill this month that seeks to prohibit online sweepstakes games. The bill, SB5935, also grants authority to the New York State Gaming Commission to enforce penalties against operators that derive revenue from illegal markets.
Association explains its position
High 5 Entertainment is a member of the Social and Promotional Gaming Association (SPGA). The alliance asserts that it aims to provide regulators with a deep understanding of the offerings available in the space.
Although the SPGA declined to comment on the wider implications of the Connecticut order, the association issued a statement on Addabbo’s bill. In denouncing the intent of the measure, the SPGA contends that the legislation “conflates” legal promotional sweepstakes with gambling.
“From fast-food chains to app developers, companies have long relied on sweepstakes as a lawful marketing tool. By attacking this widely accepted business model, the bill jeopardises businesses operating within clear legal boundaries,” the association wrote in a statement.
One question moving forward is whether a major violation in one state will affect the suitability of a licensee in another. For instance, stakeholders continue to debate whether last week’s suspension will prompt other states to examine High 5’s business practices. Despite Connecticut’s unprecedented order, it is unclear how many others will follow suit.
Fluharty, though, anticipates potential multi-state cooperation moving forward.
The pursuit of any illegal, black market operator should “incentivise states sitting on the sideline to regulate and protect, instead of allowing this rampant conduct to continue”, he said.