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Gov. Gavin Newsom signed California’s sweepstakes casino ban into law over the weekend, with the legislation set to take effect on Jan. 1.
The ban slams the door on a lucrative market for the sweepstakes casino industry, which is projected to earn more than $4 billion in 2025.
Sweepstakes casinos are online platforms that offer casino-like gaming that users can play for free with Gold Coins, or enter contests for prizes with Sweeps Coins. Generally speaking, users can buy Gold Coins but not Sweeps Coins.
The decline of sweeps casinos in 2025
The sweeps casino industry has come under fire over the past year for several reasons.
First, regulated gaming leaders in states across the country have voiced frustration over the fact that sweeps casinos aren’t governed by the same regulations as legal online casinos. For example, online casinos have to pay a state tax specific to gambling, while, in most cases, sweeps casinos do not.
Second, sweeps casinos are seen as competitors to online casinos, pulling revenue away from leading gaming companies like DraftKings, FanDuel, Caesars, and BetMGM, as well as from legally recognized tribes that operate casinos.
Additionally, the American Gaming Association (AGA) released a study earlier this year indicating sweeps customers believe the platforms are gambling and that they play with the intention to earn money. The AGA included a stinging critique of sweeps casinos that anti-sweeps advocates typically agree with:
“These operators present themselves like legal, regulated platforms – but they operate outside the law and regulation.”
American Gaming Association
As a result, other major gaming states such as New Jersey have driven out sweeps casinos, and New York is considering the same move.
Could the sweeps ban open the door for CA online casinos?
With sweepstakes casinos on their way out in California, it clears out any competition that online casinos might have faced in the Golden State if they were legalized.
That said, online casinos would be a hard sell in a state that strongly rejected a pair of 2022 amendments that would’ve legalized online sports betting. Based on the state’s recent gaming history, the most likely scenario might be the state giving federally recognized tribes exclusive rights to online casinos.
Will sweepstakes casinos survive in 2026?
The future does not look good for US sweeps casinos next year. The industry will lose a significant chunk of revenue because of California’s ban and the existing bans in other high-revenue states such as New Jersey.
The industry may have to reinvent itself to stay alive. Options could include agreeing to regulations similar to online casinos or operating in states via licenses provided by casinos or federally recognized tribes.
