As the U.S. sports betting industry continues to boom, state regulators aren't as welcoming of the unregulated sweepstakes casino market.
Since 2020, the sweepstakes vertical, a smash hit with younger players thanks to its ‘freemium’ model, has gone from unknown to extremely popular, with rapper Drake regularly promoting the Stake.us sweepstakes casino through his Instagram page.
However, the party has been somewhat interrupted by a growing number of states, who have now started to clamp down on these sites following regulatory concerns, as reported on the SweepsKings website.
The past year has witnessed several major states, including California and New York, decide to issue devastating bans against sweepstakes casinos, and a similar direction looks set to continue throughout 2026.
Current trends and movements suggest yet more bans are coming the way of sweepstakes casinos, so here’s what it all means for players.
California and New York Have Banned Sweepstakes Casinos, Further Bans Coming
Last year saw multiple state legislatures completely ban dual-currency sweepstakes casinos, also known as ‘social casinos’.
Meanwhile, others sent hundreds of cease-and-desist letters to active operators asking them to leave, arguing that these casinos use virtual ‘Sweeps Coins’ as a substitute for cash, functioning in the way of a loophole.
California and New York both successfully passed their own anti-sweepstakes casino bills in 2025, causing major harm to revenue and player counts.
“Online sweepstakes casinos are illegal, dangerous, and can seriously ruin people's finances,” said New York Attorney General James, while California Assemblymember Avelino Valencia accused sweepstakes operators of functioning “without proper oversight, avoiding requirements like consumer protections, responsible gaming safeguards, background checks, and tax compliance.”
Montana, Connecticut, New Jersey, and Nevada also successfully passed their own bills against sweepstakes casinos that same year, with more set to follow in 2026.
Not even halfway through the year, Indiana has already become the first state to officially outlaw sweepstakes casinos, with the state’s HB 1052 bill coming into effect this July.
Multiple sweepstakes casino operators have also recently left Tennessee ahead of a proposed ban, while Virginia, Oklahoma, Maryland, and several others are also exploring potential bans.
It’s not a complete wipeout of sweepstakes casinos, as these popular sites are still legal in more states than where they’re currently banned, but it certainly marks a growing anti-sweepstakes shift that looks set to cause even further revenue damage to the industry.
Whereas before sweepstakes casinos had the freedom to operate in close to every U.S. state, the options are gradually becoming more limited and brands are now starting to feel the squeeze.
Why Sweepstakes Casinos Are Under Fire in the U.S.
At the moment, sports gambling is thriving in America.
Interestingly, though, the U.S. has always been much stricter when it comes to regular online casinos, which are still only available in eight states.
And now it appears as if it’s also going to be the same story with sweepstakes casinos based on the recent legal and regulatory reactions from growing states.
The problem that states like California and Montana have with sweepstakes casinos is that these sites operate in a legal grey area, often mimicking real-life gambling while avoiding traditional gambling laws.
Inside most sweepstakes casinos, players aren’t allowed to bet real money and can only use ‘Gold Coins’ and ‘Sweeps Coins’, with the latter allowing them to redeem prizes.
State lawmakers believe this is nothing more than a smart legal trick used by operators to circumvent the law while still being able to generate revenue, as players are given the option to purchase coin packages using real money if they wish to.
So far, sweepstakes operators have refused to adapt or alter their existing model because they rely on players purchasing these coins to make money, although the likes of Chumba Casino and Stake.us have at least raised their minimum player age to 21 or over.
The argument put forward by leading operators and industry advocacy groups such as the Social Gaming Leadership Alliance (SGLA) is that sweepstakes casinos are fundamentally different to traditional gambling sites and offer free-to-play options for all users, meaning they shouldn’t be affected by strict regulations.
But these growing states aren’t buying it, which is why plenty of them have either created or successfully passed anti-sweepstakes casino bills over the past year.
How Current State Bans Have Shaped Up
As it stands, sweepstakes casinos have been officially banned or heavily restricted in Idaho, Washington, Michigan, Montana, Connecticut, New Jersey, California, New York, Louisiana, Delaware, and Indiana.
It’s a significant number of states that could potentially even double by the end of the year if the other states currently pushing for bans are successful in doing so.
Of course, it’s led to a wave of player complaints online, many of whom are unhappy that their options are fast becoming more limited.
Players Enjoy the Freemium Prize-Winning Model
Sweepstakes casinos have actually been around since the 2010s, with the long-standing Chumba Casino first hitting the internet all the way back in 2012.
Since then, the industry has experienced exponential growth which was only accelerated by the COVID-19 pandemic, a time when people were stuck at home in need of some free entertainment.
It’s largely because of this why sweepstakes casinos are so popular: they’re the only type of online casino where you can technically play for free without betting anything.
At the same time, it’s still possible to win prizes while even enjoying additional features like climbable leaderboards and free-entry tournaments, so it’s no surprise that players are hooked.
The SGLA Pushing to Cut Deals with States
In response to the rapidly growing number of states banning sweepstakes casinos, the SGLA is trying to cut deals with states to get them to reverse.
Before Indiana recently passed its bill, the SGLA had proposed an alternative regulatory framework that potentially could have earned the state upwards of $20 million a year from taxes on player purchases.
The group, which was founded by the owner of Chumba Casino ‘VGW’, has also lobbied other states including New York, which saw the SGLA warn the Empire State that banning sweepstakes casinos and other social games could force them to lose out on up to $230 million a year.
And with more states currently pushing to ban sweepstakes gaming sites, the SGLA will almost certainly push for deals that would again encourage these states to regulate sweepstakes casinos rather than outright ban them.
Expansion to Australia
The U.S. is in the process of adopting an anti-sweepstakes casino stance, so sweepstakes operators are already looking at international expansion options to recoup their lost players and revenue.
Australia looks set to be one of the new destinations, where sweepstakes casinos are legal under the current legal framework.
Roo Vegas a small number of other sweepstakes casinos are now active in the Land Down Under and it’s inevitable that the list will suddenly start to grow following recent U.S. state bans.
Further expansions throughout Europe and Asia are also likely, especially if the ongoing anti-sweepstakes casino bills from other states are passed into law before the year ends.
What’s Next for Sweepstakes Casinos?
For around a four-year period that first started during COVID-19, sweepstakes casinos dominated the iGaming space.
The fresh and exciting concept they brought to players essentially allowed sites to rake in millions of players while being accessible in close to every state possible.
Unfortunately, the sweepstakes ‘party’ has since crashed following a wave of states deciding to ban this new type of casino.
Revenue projections are currently down and millions of players within these states have been left without any sweepstakes operators to play on.
However, none of this marks the end for the sweepstakes casino industry, as these sites are still extremely popular and remain active in well over half of America’s states.
International expansion will also help them to garner more players, and there’s still a strong possibility that sweepstakes casinos could strike regulatory deals with states that generate revenue for them.
It’s an interesting time for the iGaming vertical and the next year or so will largely determine its future.
