As the US sports betting industry turned its focus to prediction markets in 2025, state legislators and regulators were tuned to unregulated sweepstakes casinos and will continue to focus that direction into 2026.
Multiple state legislatures passed bans on dual-currency sweepstakes casinos, platforms that mimic online casinos and sportsbooks. Meanwhile, regulators sent hundreds of cease-and-desist orders to the websites, arguing the platforms exploit legal gambling loopholes by offering non-monetary “gold coins” and another currency known as “sweeps coins” that can be exchanged for real money products.
Heading into 2026, lawmakers in more states are introducing bills that would ban the websites as the sweepstakes industry calls for regulation of the product that would legitimise it.
“This issue has brought lawmakers together that it represents illegal gambling and revenue theft in many states,” West Virginia Delegate Shawn Fluharty, who is also president of the National Council of Legislators from Gaming States (NCLGS) and head of government affairs at operator Play’n GO, said at the NCLGS Winter Conference in Puerto Rico Thursday.
“Rarely do we agree on anything as lawmakers, but on this issue, we agree that this represents illegal gambling operations.”
Sweepstakes casinos generated $10 billion in sales in 2024, according to an Eilers & Krejcik study for the Social Gaming Leadership Alliance, or SGLA.
Consistent action against sweepstakes casinos in 2025
This month, New York Governor Kathy Hochul signed into law Senate Bill 5935 to ban sweepstakes casinos. New York legislators passed the bill this summer, when Attorney General Letitia James also sent cease-and-desist letters to 26 sweepstakes operators. The E&K study estimates the New York market accounted for $762 million in 2024 sales.
Hochul’s signature followed multiple other governors who approved sweepstakes bans, including California Governor Gavin Newsom, who signed Assembly Bill 831 in October. AB 831 passed both California legislative chambers unanimously. At October’s Global Gaming Expo in Las Vegas, analysts on a panel about sweepstakes estimated California accounts for approximately 20% of sweepstakes casinos revenues.
Along with New York and California, lawmakers in Connecticut, Montana and New Jersey passed similar legislation. Louisiana legislators also passed a ban, but Governor Jeff Landry vetoed the bill and said the state’s gambling regulators already possess the ability to enforce the state’s gambling laws. The Louisiana Gaming Control Board then sent 40 cease-and-desist letters to unregulated gambling operators, including sweepstakes sites.
Legislatures in Mississippi and Maryland took a pass on prohibitions, but state regulators sent cease-and-desist letters. Other states like Arizona and Michigan also contributed in sending more than 100 cease-and-desist letters to sweepstakes operators in 2025.
“The one thing I’ve said all along is you can’t all break in through the backdoor,” Dan Hartman, senior advisor at GMA Consulting and former Colorado Division of Gaming director, said at the NCLGS conference. “Companies pay a lot to get licensed and do the things they do in our state.”
As states and provinces began to crack down on sweepstakes casinos, major operator VGW pulled out of Canada to focus on the US. A VGW spokesperson said the move was made to consolidate resources on its largest market.
Sweepstakes casino operators call for regulation
Unlike the flurry of lawsuits filed by Kalshi in response to state regulatory action, sweepstakes operators largely obliged state requests. Jeff Duncan, a former South Carolina congressman and executive director of the SGLA, said at NCLGS that they are working to educate lawmakers on what makes sweepstakes casinos different than gambling.
Duncan said states have had sweepstakes laws for more than 70 years, and they need to be updated to reflect the digital nature of the 21st century. He said regulators make decisions based on antiquated laws.
“We want to be regulated. We want to pay taxes,” Duncan said. “It’s never dollar-for-dollar, you’re never wagering your money.
“In a regulated, taxed environment, there is an opportunity to help the budget of the states that are struggling. If you kick them to the curb, you miss out on the opportunity on tax revenue for the state and creating a regulated environment we advocate for.”
Hartman said it is nice to see the suggestions and desire to upgrade regulations from the SGLA, but said the efforts are “maybe a little too late”. Fluharty said the pivot to call for regulation and differentiate from gambling is “a great pivot, great politicking, but not great policy”.
“Redeemability to real money is the real issue. It is illegal gambling if it’s $30 in coins and it’s 30 coins,” Fluharty said.
States ready 2026 sweepstakes casinos legislation
While 2025 was a landmark year for anti-sweepstakes legislation, attention on grey market operators is not straying yet. Lawmakers in Florida, Indiana and Maine this month introduced bills outlawing sweepstakes casinos. Meanwhile, Oklahoma Indian Gaming Association Chairman Matthew Morgan said sweepstakes legislation is something that should be pursued in the next legislative session.
Florida Rep. Berny Jacques filed the 86-page House Bill 591 ahead of the 2026 legislative session. The bill makes operating, conducting or promoting internet gambling a third-degree felony. The bill aims to strengthen the Seminole tribe’s gambling monopoly in the state. The SGLA came out against the bill.
An SGLA economic impact report estimated Florida accounts for 8.5% of sweepstakes operator revenue in 2025. That accounts for more than $1 billion in purchases. The report suggested a 6% tax on player purchases that could create an additional $63 million in state taxes.
Florida lawmakers introduced similar bills in 2025, but they did not gain much traction.
In Maine, Senator Craig Hickman introduced LD 2007 to outlaw sweepstakes casinos. Maine Gambling Control Unit Executive Director Milton Champion sent a consumer warning notice this summer.
Indiana Rep Ethan Manning introduced House Bill 1052, which defines sweepstakes and sets civil and criminal penalties.
Pat Evans
Pat covers the legislation and regulation of online gambling in North and South America, having covered the US sports betting industry extensively since 2019.
Original article: https://igamingbusiness.com/legal-compliance/2025-sweepstakes-casinos-year-in-review/
