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This past week, New Jersey’s ban on sweepstakes casinos took effect, pushing out major sweepstakes casino operators in the state and casting doubt on the future of an industry that has grown rapidly over the past two years.
Where are sweepstakes casinos headed in the wake of the New Jersey ban and a broader push to end U.S. sweeps casinos? There are three likely outcomes.
Outcome 1: Sweepstakes casinos exit the U.S. market
Over the past few years, 11 states have either banned sweepstakes casinos or used legal pressure to push them out. Other states could follow for two key reasons. First, states typically do not regulate sweepstakes casinos the way they regulate real-money online casinos, meaning sweeps operators generate far less tax revenue. Second, online casino operators have a vested interest in eliminating sweeps competition.
A recent report from the American Gaming Association found that most sweeps casino users expect to win money and view their play as gambling — a direct challenge to online casinos. States with legalized online casinos that have not yet banned sweeps casinos —West Virginia, for example — may soon face pressure from industry advocates to do so.
Outcome 2, adapting to survive: sweeps casinos face a reset
New Jersey banned sweepstakes casinos based on their current model: Users can play for free, but they may also purchase gold coins that unlock bonuses and sweeps coins that can be redeemed for merchandise or cash prizes if players meet certain playthrough requirements.
However, the ban left the door open for sweeps casinos to remain in the state under one condition: Operators must follow rules that equalize prize odds for all users, regardless of whether they buy gold coins.
This approach would require significant changes to how sweeps casinos operate, and it remains unclear how much it would impact revenue.
Outcome 3: The case for licensing sweepstakes casinos
A third possibility is that states introduce a licensing process for sweepstakes casinos, similar to online sports betting regulations.
In some states, gaming commissions allow existing casinos to launch online sports betting through a “skin.” A casino typically has one or two skins that it can extend to sports betting operators, who then share revenue with the host casino.
A similar framework could be applied to sweeps casinos. For example, a state with online gaming could pass legislation allowing existing online or land-based casinos to extend skins to sweeps operators. Under this system, sweeps casinos could operate legally but only under state regulations for licensed casinos.
This approach would generate additional tax revenue while also providing a new revenue stream for existing casinos. The stakes are significant: Sweeps casinos are projected to generate more than $12 billion in revenue by 2031.
