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Vibe Killer: What’s Next for Sweepstakes Casinos After Recent Bans?

Could the current sweepstakes casino crackdown fuel the next wave of online casino expansion — or signal the end of an industry?

Verbiage Illustration Says Please Don't Kill My Vibe With Praying Hands
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J.R. Duren Avatar
2 mins read
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This Thursday, sweepstakes casinos will likely shut down in New Jersey, adding to a growing list of states that have given sweepstakes casinos the boot.

As sweepstakes casinos reach a crossroads in the United States, questions are mounting about how other states will respond to the anti-sweeps movement.

Sweeps Crackdown Could Supercharge Online Casino Growth

So far, five states consider sweepstakes casinos illegal, and another five have prompted operators to exit through cease-and-desist letters or regulatory pressure:

  • Bans: Connecticut, Idaho, Montana, New York, Washington
  • Letters/pressure: Louisiana, Maryland, Michigan, Mississippi, Nevada

New Jersey’s ban is set to take effect Thursday, pushing the total number of states with anti-sweeps laws to six. That figure is expected to rise to seven if a sweeps ban bill advancing through the California Legislature reaches Gov. Gavin Newsom’s desk.

Notably, three of the 11 states mentioned above already have legal online casinos. That matters for gaming expansion: Only seven states allow iGaming, so it’s likely that more jurisdictions will legalize online casinos.

For example, Illinois Attorney General Kwame Raoul recently said launching online casinos is the natural next step for a state that already has land-based casinos and online sports betting.

Online Casino Boom or Sweeps Bust? The Battle Heats Up

The growing pushback on sweepstakes casinos could result in three scenarios:

First, online casino operators may view a sweeps ban as a way to push out competition for gambling dollars. A recent survey from the American Gaming Association noted that sweepstakes casino users consider the platforms gambling and play with the expectation of winning real money. Additionally, gaming consultants SCCG Management project the sweepstakes casino industry will generate more than $12 billion in revenue by 2031.

Second, lawmakers might push sweeps bans to generate tax revenue. Most sweepstakes casinos operate outside casino regulations, meaning the revenue they earn is not taxed the same way that online or land-based casino revenue is taxed. Lawmakers could view that as a missed opportunity.

Finally, a third — though less likely — scenario could emerge: Online casino operators might view sweepstakes casinos as an additional revenue stream that reaches customers that online casino platforms do not. Operators could lobby lawmakers to allow a certain number of sweepstakes casino licenses, similar to how some states allow a limited number of sports betting licenses.

Rough Waters Ahead for Sweepstakes Casinos — Tide Could Turn

With New Jersey’s pending ban and California’s likely passage of one, the horizon will remain stormy for sweepstakes casinos.

However, that does not mean the developments so far are the early stages of a slow sweeps death. If gaming operators see sweepstakes casinos as a way to reach consumers who would not otherwise play online casinos, the winds that blow bitterly now could shift — steering sweepstakes casinos toward calmer, and more profitable, waters.

J.R. Duren Avatar
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J.R. Duren has covered the gambling beats for more than a dozen states for Catena Media since 2015. His past reporting experience includes two years at the Villages Daily Sun, and he is a first-place winner at the Florida Press Club Excellence in Journalism Contest.

View all posts by J.R. Duren

J.R. Duren has covered the gambling beats for more than a dozen states for Catena Media since 2015. His past reporting experience includes two years at the Villages Daily Sun, and he is a first-place winner at the Florida Press Club Excellence in Journalism Contest.

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