New Jersey Enacts Ban on Sweepstakes Casino Sites

New Jersey has joined a growing list of U.S. states moving to curb sweepstakes-style online casinos, with Governor Phil Murphy signing legislation Friday that prohibits the so-called “sweepstakes model of wagering.”

The new law, Assembly Bill 5447, empowers state regulators to enforce the ban and imposes penalties on operators offering the games. The measure cleared the state legislature in June before receiving Murphy’s approval after weeks of review.

 

Defining the model

Sweepstakes casinos operate using a dual-currency system. Players purchase “gold coins” for entertainment purposes, while also receiving or acquiring “sweeps coins,” which can be redeemed for cash prizes. Operators argue the model is distinct from real-money iGaming because players can also obtain sweeps coins for free, similar to promotional contests run by companies such as McDonald’s or Publishers Clearing House.

Opponents, including traditional gaming interests and regulators, say the model exploits loopholes in sweepstakes law to provide online gambling in states where it remains illegal. Currently, real-money online casinos are authorized in just seven states, while sweepstakes operators run in dozens of jurisdictions under varying levels of scrutiny.

New Jersey is the sixth state this year to take legislative action against sweepstakes casinos. Connecticut, Montana, and New York legislatures have approved similar bans, while Nevada enacted a broader law targeting unlicensed gambling without specifically banning sweepstakes. Louisiana’s legislature passed a prohibition, but Governor Jeff Landry vetoed it, arguing regulators already had sufficient tools.

Enforcement actions have intensified alongside legislation. Both New York and Louisiana issued cease-and-desist orders to several companies, most notably Australian operator Virtual Gaming Worlds (VGW), prompting the firm to withdraw from multiple markets, including New Jersey. “These actions send a clear message,” Louisiana Gaming Control Board Chair Christopher Hebert said when announcing enforcement orders earlier this year. “Louisiana will not tolerate illegal operators who put our citizens at risk and undermine the fairness and integrity of our gaming industry.”

California, one of the largest grey markets for sweepstakes, is considering its own prohibition, with AB-831 advancing through the legislature under heavy support from tribal casino interests.

 

Industry divides

The debate has sharpened between casino lobbyists and sweepstakes trade groups. The American Gaming Association (AGA), a staunch critic, released a survey in July finding that 90% of regular sweepstakes players considered the activity either “definitely” or “probably” gambling.

Trade associations representing sweepstakes operators dispute that characterization. The Social Gaming Leadership Alliance (SGLA), led by former South Carolina Congressman Jeff Duncan, argued New Jersey’s measure misrepresents the business model. “These bills may have passed the Legislature, but they’re the wrong solution to a misunderstood issue,” Duncan said in a statement before Murphy signed the law.

The Social and Promotional Games Association (SPGA), another group advocating for operators, went further, warning that New Jersey’s ban could damage its reputation as a technology-friendly hub. “Governor Murphy has an opportunity to do what the Legislature would not – listen to facts, not fear,” an SPGA spokesperson said prior to the bill’s approval.

 

Louisiana will not tolerate illegal operators who put our citizens at risk and undermine the fairness and integrity of our gaming industry.

 

Broader implications

New Jersey’s action underscores mounting pressure on an industry that has thrived in legal ambiguity. With multiple states advancing bans and regulators stepping up enforcement, sweepstakes operators face shrinking markets and intensifying scrutiny over their legitimacy.

At the same time, the legislative push highlights broader questions about where to draw boundaries between promotional contests, social gaming, and regulated gambling — a debate that is likely to shape the next phase of U.S. gaming policy.