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This past week, New York Gov. Kathy Hochul signed into law revisions to the state’s gaming regulations that ban sweepstakes casinos, putting them in the same category as illegal online casinos.
The ban comes less than six months after Attorney General Leticia James, New York State Gaming Commission Chairman Brian O’Dwyer, and Sen. Joseph P. Addabbo Jr. worked together to remove 26 sweepstakes casinos in June — a move that foreshadowed the state’s decisive ban this month.
“At a time when illegal gambling, underage participation, and identity theft are soaring, it is deeply concerning that prohibited, unregulated, and unenforceable gambling entities are providing easy access to illegal gaming sites and obtaining personal information of unsuspecting New Yorkers,” Addabbo said in June press release, expressing concerns that often drive states to ban sweepstakes casinos.
The bill proposing the sweepstakes ban passed the state’s Assembly and Senate in June and signed by Hochul on Dec. 5.
Are sweepstakes casino bans an official trend in US gaming?
At this point, yes. New York’s new ban serves as a punctuation mark on a year in which multiple states passed legislation making sweepstakes casinos illegal. Those states include:
- California
- Connecitcut
- Montana
- Nevada
- New Jersey
Michigan and Louisiana have cracked down on sweepstakes casinos using existing law, and Indiana lawmakers recently submitted a bill that would ban sweepstakes casinos outright. Earlier this year, the Pennsylvania Gaming Control Board asked lawmakers to propose similar legislation, but that effort has not materialized as the board had hoped.
New York’s ban is particularly significant not only because it caps a year of aggressive action against sweepstakes casinos, but also because of the size of the New York market. The state is one of the nation’s largest sports betting markets, regularly handling more than $1 billion in wagers each month. Its casino industry is also growing, with plans to open three downstate casinos within the next five years. Removing sweepstakes casinos could also open the door for legal New York online casinos, which woud not, in theory, have to compete with sweepstakes platforms for revenue.
“The recent desire by some states to bring the hammer down on sweepstakes casinos has generally stemmed from a perception of virtual sweepstakes contests as little more than thinly-veiled illicit gambling enterprises, operating outside of the strict regulatory framework that governs brick and mortar casinos and state-sanctioned online wagering,” law firm Nelson Mullins wrote while reflecting on regulatory changes in 2025.
That massive markets such as New York, California, and Nevada have moved to eliminate sweepstakes casinos signals a dramatic shift. What appeared to be a promising future just a few years ago now looks uncertain at best heading into 2026.
Why are sweepstakes casinos controversial?
Sweepstakes casinos use a two-tier token system. The first tier, often called gold coins, is typically required to play games on the platform. Users can earn these coins by logging in daily or receiving bonuses through gameplay. The second tier, sweepstakes coins, can be redeemed for prizes, including real cash. In many cases, the games closely resemble traditional casino-style slot machines.
Though the model may appear relatively harmless, the industry generated more than $10 billion in revenue in 2024, according to a study by gaming consultants Eilers & Krejcik. It is a large industry — and a controversial one.
Users view sweepstakes casinos as gambling
While sweepstakes casinos market themselves as free-to-play platforms, a recent survey from the American Gaming Association found that users overwhelmingly view them as gambling. The survey found that:
- 90% believe they are gambling
- 80% say they spend money monthly to play, and about half spend money weekly
- 69% say sweepstakes casinos are a place to wager real money
- 68% say the main reason they play is to win money
“As scrutiny around online ‘sweepstakes’ casinos intensifies, new research from the American Gaming Association reveals that consumers overwhelmingly view these platforms as gambling and that these operators are heavily targeting players in key states,” the AGA said. “By exploiting loopholes in the law, these operations undermine the integrity of the legal, regulated gaming marketplace.”
Sweeps casinos aren’t regulated
The AGA’s analysis highlights one of the most common criticism of sweepstakes casinos: They are unregulated.
In practical terms, this means sweepstakes casinos are not bound by the same state or federal laws that govern licensed online and land-based casinos. Licensed operators must apply for gaming licenses and comply with strict regulatory standards, including requirements related to consumer protections and guaranteed payouts.
Because sweepstakes casinos do not follow those rules, users often have little insight into how secure the platforms are. There is also no guarantee winnings will be paid out. If a sweepstakes casino refuses to honor a payout, customers have limited recourse.
Responsible gaming safeguards aren’t required
Another frequently cited concern is that sweepstakes casinos are not required to follow responsible gaming guidelines. As a result, these platforms may lack prominent problem gambling resources or any meaningful promotion of responsible gaming practices.
Critics argue this creates risks for people who have self-excluded from legal casinos and could expose underage users to gambling-like experiences.
“These so-called sweepstakes casinos not only put individuals at risk of fraud and financial exploitation, but they also create dangerous pathways for gambling addiction, especially among minors,” Addabbo said in June.
“This is not about taking away anyone’s livelihood, it’s about protecting New Yorkers and working toward a safer, regulated online gaming environment for age-appropriate individuals.”
What’s next for sweepstakes casinos?
The outlook for sweepstakes casinos in the US appears increasingly bleak. As major markets outlaw the platforms, similar legislation may spread to other states with legal real-money online casinos, land-based casinos, or both.
Pennsylvania is a leading candidate for future action. It is one of the nation’s largest gaming markets and has a robust iGaming industry that could benefit from a sweepstakes ban. Other potential candidates include large markets such as Illinois and Ohio.
