The US sweepstakes casino market came under significant regulatory scrutiny in 2025, with major states including New York and California passing bans while state regulators issued hundreds of cease-and-desist letters to operators. The actions highlight a growing focus on unregulated online gaming platforms, as legislators prepare for more comprehensive measures in 2026.

Dual-Currency Sweepstakes Casinos Draw Legal Attention

Dual-currency sweepstakes casinos—platforms that simulate online casinos and sportsbooks using non-monetary “gold coins” and “sweeps coins” redeemable for prizes—became a central point of concern for regulators. Multiple states passed legislation banning these operations, arguing that the platforms exploit legal loopholes to offer gambling-like experiences without oversight.

“This issue has brought lawmakers together that it represents illegal gambling and revenue theft in many states,” said West Virginia Delegate Shawn Fluharty, president of the National Council of Legislators from Gaming States (NCLGS). “Rarely do we agree on anything as lawmakers, but on this issue, we agree that this represents illegal gambling operations.” According to a 2024 study by Eilers & Krejcik for the Social Gaming Leadership Alliance (SGLA), sweepstakes casinos generated $10 billion in sales in 2024, underscoring the scale of the market targeted by regulators.

In December 2025, New York Governor Kathy Hochul signed Senate Bill 5935 banning sweepstakes casinos after Attorney General Letitia James issued cease-and-desist letters to 26 operators. New York accounted for an estimated $762 million in sweepstakes sales in 2024. Similarly, California Governor Gavin Newsom signed Assembly Bill 831, passed unanimously by the state legislature, effectively banning dual-currency sweepstakes operations. Analysts estimate California represents roughly 20% of US sweepstakes revenue.

Other states including Connecticut, Montana, and New Jersey passed similar prohibitions. Louisiana lawmakers approved a ban, but Governor Jeff Landry vetoed the measure, citing existing regulatory authority; the state gaming board then issued 40 cease-and-desist letters. Mississippi, Maryland, Arizona, and Michigan also relied on regulatory enforcement rather than legislative bans, collectively sending more than 100 cease-and-desist notices in 2025. “The one thing I’ve said all along is you can’t all break in through the backdoor,” said Dan Hartman, senior advisor at GMA Consulting and former Colorado Division of Gaming director. “Companies pay a lot to get licensed and do the things they do in our state.”

The pressure led major operator VGW to exit Canada to focus resources on the US market.

Sweepstakes Operators Push for Regulation

Sweepstakes casino operators largely complied with regulatory demands, contrasting with litigation-heavy responses from prediction market operators such as Kalshi. Jeff Duncan, executive director of the SGLA, called for updated legislation to modernize sweepstakes laws for the digital era.

“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.” However, critics argued that legalization proposals fail to address the core legal issue: redeemability to real money. Fluharty said, “Redeemability to real money is the real issue. It is illegal gambling if it’s $30 in coins and it’s 30 coins.”

 

US regulators and lawmakers are cracking down on sweepstakes casinos, citing unregulated gambling and potential revenue loss.

2026 Legislative Outlook

Looking ahead, lawmakers in Florida, Indiana, and Maine introduced bills to outlaw sweepstakes casinos in early 2026. Florida Rep. Berny Jacques filed House Bill 591, creating third-degree felony penalties for internet gambling, which the SGLA opposed. The state’s sweepstakes market represents 8.5% of US revenue, over $1 billion in purchases, with analysts projecting a potential $63 million in tax revenue under a 6% levy.

In Maine, Senator Craig Hickman introduced LD 2007, while Indiana Rep. Ethan Manning proposed House Bill 1052, defining sweepstakes and establishing civil and criminal penalties.

As 2025 closes, state regulators and legislators remain vigilant toward sweepstakes casinos, signaling continued enforcement and legislative activity in 2026. The crackdown reflects growing consensus among lawmakers that dual-currency sweepstakes platforms constitute a form of unregulated gambling, even as operators call for a regulated framework.