How Sweepstakes Work As a Business in iGaming
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Sweepstakes casinos are platforms offering something unique to casino game enthusiasts. They operate under a different set of rules when compared to traditional online casinos. However, players can still find Sweeps Cash casinos that offer real money as a prize.
Those new sweepstakes casinos may be confused about why they are unique. Let’s start by understanding how a sweepstakes casino works before jumping into its business structure.
Sweepstakes Casinos
A sweepstake casino fuses the concept of social gaming and traditional casinos in one platform. Players visiting a sweepstakes casino site will find games similar to that on conventional casino sites, such as slots, blackjack, poker, roulette, and more. Like any online casino, sweepstakes casinos allow players to access and enjoy their preferred entertainment virtually.
When a player decides to access the game collection in a traditional online casino, they’d have to fund their account using real money. That money will become the credit in the account, which users can use as wagers on the platform. Players accessing sweepstakes casinos don’t need to fund their accounts with real money. Instead, they would have to obtain virtual currencies unique to the casino.
These virtual currencies are the only ‘money’ users can use to bet on the games available. If a player wins in a game, they receive more virtual tokens as a prize. After winning a game, players can exchange the virtual tokens they have earned for gift cards or cash prizes.
Sweepstakes Casinos Regulation
The gambling industry is heavily regulated, and in the United States, sweepstakes are legal in most states with Washington being the only exception. Sweepstakes casinos are treated as promotional sweepstakes rather than gambling activities, and this makes them easier to operate.
Players purchasing the virtual coins are considered to be paying an entry fee. That’s why a sweepstake casino can also reward real cash prizes in return without getting into the same classification as traditional online casinos.
Revenue Model of Sweepstakes Casinos
Due to the significant difference in their payment system, sweepstakes casinos can’t make profit like traditional online casinos. In traditional online casinos, players directly bet using real money, and the casinos generate revenue from the losses of players. In sweepstakes casinos, although the flow of money isn’t as apparent, there are many strategies that operators implement to ensure they can keep the business going.
Virtual Currency
Just like traditional online casinos, sweepstakes casinos also offer various promotions to give customers bonuses. With sweepstakes casinos, players often receive virtual currency for free as welcome bonuses. When players spend all their coins but still want to keep on playing, the operator provides a virtual store where users can purchase currency packages.
These packages often sell more than just coins. They can give users extra benefits and come in various denominations. The more expensive the package is, the more significant the bonuses will be. This entices players to buy more, and the casino generates revenue from players’ purchases.
In-app Purchases
Selling currency packages isn’t the only way for the operator to make money. They can also incorporate in-app purchases and microtransactions to get more revenue. Players can receive virtual items, unlock special game features, or decorate their avatars, but these require actual money transactions. Not only can these special features increase players’ engagement, but they can also provide the business with extra income.
Sponsors and Advertisements
Like many websites, sweepstakes operators can also generate revenues from taking in sponsorships or affiliate partnerships. They can collaborate with brands by displaying advertisements on the platform, allowing the casino to generate revenue from the ad placements. It’s a widespread method for free-to-play services aiming to get extra profit. They’ll ask players to interact with the advertisement in exchange for virtual benefits so the casino can generate revenue.
The Payout System of Sweepstakes Casinos
Sweepstakes casinos allow players to win real cash prizes when they play, yet the casinos need to have a way of maintaining a flow of income. Operators must also know how to keep customers loyal in order not to lose their source of revenue.
Virtual Currency Payouts
As mentioned above, users winning their games will receive virtual currencies as a reward. They can use their winnings to play more games or exchange them for items the casino offers.
One of the offers is usually cash prizes or gift cards, both of which have real-life value to players. The casino can adjust the conversion rate of their virtual currency to real-life currency to ensure they’re not losing more than they gain. That way, they are able to still offer something attractive to players while maintaining reasonable flow of revenue.
Prizes
Sweepstake casinos can reward winning individuals with virtual currency, but they can also offer players tangible items. These prize payouts can be an attractive way to keep players engaged, but the casino must be creative in finding a way to balance out their spending.
Sweepstakes casinos offering prize payouts usually balance it out based on the entry fee the players pay or the number of players in one game. When the operator calculates things well, they are able to offer competitive items as rewards to customers while still keeping their income steady.
