Sweepstakes casinos remain a visible part of the U.S. online gambling landscape, but the legal room they operate in keeps shrinking. Regulators, state lawmakers, tribal stakeholders and licensed casino operators are increasingly treating dual-currency sweepstakes platforms as a form of unlicensed online gambling rather than a harmless promotional model, and a growing stack of state laws is now backing that view with real penalties.
The scale of the sector is a big part of why the scrutiny has intensified. American Gaming Association research found that sweepstakes casino ads made up roughly half of all online real-money casino advertisements seen by U.S. consumers in early 2025 — and that same research found 90% of sweepstakes casino users considered the activity gambling, with 69% describing the platforms as places to wager real money.
A Model Built on Two Currencies
Most sweepstakes casinos run on a dual-currency system: one currency for entertainment-only play, and a second that can be earned through promotions or purchases and later redeemed for cash or cash-equivalent prizes. The legal argument has always been that free entry keeps the product outside gambling law. But when a platform offers slots, roulette or blackjack-style games tied to a currency redeemable for cash, regulators are less willing to accept the “social casino” framing — and that’s exactly the gap several states have now moved to close.
VGW, the operator behind Chumba Casino, reportedly generated A$7.3 billion in revenue for the fiscal year ending June 30, 2025, with Chumba alone accounting for roughly A$5.2 billion of that — figures that dwarf many fully regulated state gambling markets.
New York Already Pulled the Trigger
New York offers the clearest example of where this is heading. Senate Bill S5935A, which defines an “online sweepstakes game” as any internet or mobile product using a dual-currency system that lets players exchange currency for cash, prizes or cash equivalents, was signed into law by Governor Kathy Hochul on December 5, 2025. The law took effect immediately, with no wind-down period, and added Section 912 to the state’s Racing, Pari-Mutuel Wagering and Breeding Law.
The bill passed both chambers by lopsided margins — 57-2 in the Senate and 141-0 in the Assembly — following cease-and-desist action from the state Attorney General in June 2025 that had already pushed 26 operators to stop selling sweeps coins to New York players. Penalties under the law run from $10,000 to $100,000 per violation, with potential loss of gaming license eligibility, and the statute explicitly reaches beyond operators to payment processors, geolocation providers, gaming suppliers and platform affiliates.
Other States Are Writing Similar Playbooks
New York isn’t acting alone. California’s AB 831 uses comparable language, making it unlawful to operate or promote an online sweepstakes game in the state while also targeting payment processors and suppliers that knowingly support the model. Montana’s SB 555 went further, treating gambling-style platforms as a criminal matter with penalties that reportedly include fines up to $50,000 and up to 10 years in prison per offense.
Connecticut has shown what enforcement looks like in practice. In 2025, the state reached a nearly $1.5 million settlement with High5Games tied to an unlicensed online casino-style platform, including more than $643,000 in restitution to users and over $294,000 connected to self-excluded players who were still able to access the product — a detail that turns the issue into both an illegal gambling problem and a consumer protection failure.
Suppliers Are Already Adjusting
The pressure isn’t limited to the operators facing players directly. It’s also reaching the supply chain. One major game supplier said in 2025 that its content would no longer appear on U.S. sweepstakes platforms, tying the decision to shifting state legislation. That kind of exit matters more than a single operator leaving a market — it can thin out game libraries across every platform that relied on that supplier’s content.
For the licensed casino industry, the sweepstakes model has always looked like unregulated competition. Regulated operators pay licensing fees and taxes, verify identity and location, and follow responsible gambling rules that sweepstakes platforms generally don’t. As more states put statutory teeth behind that argument, the industry-wide question is shifting from “are these technically sweepstakes” to “how much of this ecosystem — operators, suppliers, payment rails and affiliates — ends up regulated out of existence.”
What Comes Next
Because gambling law is state by state, there’s unlikely to be one uniform national rule anytime soon. Instead, expect a patchwork: some states banning outright, some leaning on existing illegal gambling statutes, and others pressuring payment processors and suppliers rather than legislating directly. For players, especially in states like New York where the door has already closed, that means checking a platform’s current state-by-state terms is now more important than ever before assuming a favorite sweepstakes site is still accessible.
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