Washington, D.C. iGaming Bill Targets Dual-Currency Sweepstakes and Signals National Reckoning for Sweepstakes Models
The Washington, D.C. City Council Committee on Human Services heard nearly four hours of testimony Monday on Councilmember Wendell Felder’s (D-Ward 7) bill to legalize iGaming. Introduced in April as the Internet Gaming and Consumer Protection Act of 2026, B26-0656 would regulate online casino gaming while explicitly prohibiting dual-currency sweepstakes games in the district.
Wendell Felder opened the hearing by highlighting that D.C. residents already participate in illegal iGaming through unregulated markets to the tune of nearly $700 million a year. The core policy question is whether the district will continue allowing millions of dollars to flow outside of oversight and the local economy.
The testimony revealed deep divisions over whether legalization delivers meaningful consumer safeguards or simply expands access to gambling harms. It also underscored the growing tension between regulated gaming, sweepstakes casinos, and emerging verticals operating in legal gray zones.
The Dual-Currency Sweepstakes Ban
The legislation would prohibit dual-currency gaming products. These are defined as a game promotional scheme or platform that uses two or more forms of currency, credits, tokens, entries, points, or similar units, whether purchased or awarded, where one or more such units may be redeemed, converted, transferred, or used directly or indirectly for cash, cash equivalents, prizes, or prize equivalents.
Operators found offering such products in the district could face civil fines of up to $100,000 for each violation or up to $500,000 for repeated violations. The Office of Lottery and Gaming would enforce these penalties.
This provision goes beyond iGaming legalization. It directly challenges the business model that has powered rapid growth in sweepstakes casinos, particularly in states without legal online casino options. The ban positions D.C. as an early mover in drawing a regulatory line around these hybrid products.
Revenue, Safeguards, and the Illegal Market Reality
Matt Scalf, Senior Government Affairs Manager at DraftKings, told the committee that since launching online sports betting in the district the operator has contributed nearly $11 million in tax revenue. He argued that without iGaming legalization the district is losing out on hundreds of millions in revenue each year.
Matt Scalf added that iGaming is already occurring through unregulated sweepstakes-style platforms and illegal offshore operators. These entities generate $18.8 billion annually nationwide without paying taxes or adhering to basic player protections. For the District this represents an unrealized recurring revenue opportunity estimated at $500 million over the five-year financial plan.
John Pappas, representing iDevelopment and Economic Association (iDEA), reported more than 100,000 visits a month are made from D.C. residents to illegal offshore gambling sites. Proponents emphasized that regulated operators maintain dedicated responsible gaming teams and tools unavailable in the gray market.
Robert O’Connor, Vice President of Government & Industry Affairs for BetMGM, joined Matt Scalf in stating that six months would be more than enough time to launch iGaming with necessary consumer safeguards.
Harms, Counterarguments, and the Risk of Expanded Access
Opponents challenged the assumption that legalization automatically shifts activity into regulated channels. Oliver Barie, representing the National Association Against iGaming, reported that illegal gambling revenue actually grew nearly 64% in 2024 compared with the year before.
Brianne Doura-Schawohl, spokesperson for Campaign for Fairer Gambling, cited a Penn State University study showing more than 10% of Pennsylvania adults gambled on illegal sites in 2025, up from 6% the prior year. Regulated markets do not guarantee migration from illegal operators.
Les Bernal, National Director of Stop Predatory Gambling, estimated that Washington, D.C. residents are projected to lose $400 million in sports betting and lottery combined over the next five years. He described the current situation as residents losing $150 a minute in gambling and warned that legalized iGaming would simply give operators access to more residents without protecting them from harms.
Les Bernal stated it is like putting Dracula in charge of the blood bank. This perspective frames regulation as enabling rather than containing risk. It represents a meaningful limitation on optimistic revenue projections and requires operators and lawmakers to confront whether new verticals truly reduce overall gambling harm or redistribute it.
Bill Mechanics and Allocation Priorities
If approved, the bill establishes regulatory oversight under the Office of Lottery and Gaming. It sets a minimum age of 21, imposes a 25% tax on gross iGaming revenues, and requires a $2 million license fee. Licenses would be valid for five years with a $500,000 renewal fee for an additional five-year term if approved.
The first $500,000 of iGaming revenue is earmarked for the Department of Behavioral Health for prevention, education, and recovery services related to gambling addiction and related behavioral health needs. Remaining revenue would be allocated 30% to the Department of Insurance, Securities, and Banking for debt management and financial literacy programs, 30% to the Office of Victim Services and Justice Grants for domestic violence and survivor services, 10% to the Department of Health for research on gambling behavior, and 30% to the Department of Employment Services for youth development and training programs related to artificial intelligence, gaming, coding, and software development.
This allocation reflects an attempt to link new gaming revenue directly to mitigation, consumer protection, and workforce development in emerging technologies. It also underscores the convergence of gaming policy with broader social and economic priorities.
The Bottom Line
The D.C. debate crystallizes a national inflection point for sweepstakes and social gaming models. By pairing iGaming legalization with an explicit ban on dual-currency sweepstakes, the legislation forces operators, lawmakers, and the emerging SGL vertical to confront regulatory clarity versus market expansion. While the illegal market is undeniably large and persistent, testimony revealed genuine disagreement over whether regulated channels will capture that activity or simply layer new harms atop existing ones. As other jurisdictions watch this process, the outcome in Washington, D.C. could accelerate similar definitional fights over what constitutes acceptable promotional gaming. Operators and client-partners should treat this not as an isolated local matter but as a structural shift that will shape how sweepstakes casinos are positioned, taxed, and potentially restricted across the country.
