A growing contingent of states is pursuing legislation prohibiting forms of sweepstakes gaming. In late June, California legislators introduced a bill, AB-831, that would prohibit the operation of gambling-themed sweepstakes games in the state.1 AB-831 was advanced by the California Senate Governmental Organization Committee on July 8, and appears to be on a fast-track to a vote on the Senate floor. Connecticut, Montana, and Nevada have enacted similar "sweepstakes casino" bans; the New York and New Jersey legislatures have sent legislation banning sweepstakes casinos to their respective governors for signature; and the governor of Louisiana recently vetoed the state legislature's attempted ban, while issuing a signing statement declaring the games illegal under current law.2 A handful of additional state legislatures have considered but failed to pass sweepstakes casino bans, while numerous state attorneys general and regulatory agencies have initiated enforcement actions against what they deem to be illegal sweepstakes casino operators.3 All of this is to say that anti-sweepstakes gaming sentiment is picking up steam across the nation, with California shaping up to be the next, and potentially decisive, battleground over the future of these products.
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. In other words, while sweepstakes categorically involve games of chance, sweepstakes casinos depart from more traditional sweepstakes that did not involve casino-style games. The Mississippi Gaming Commission, for instance, recently issued cease-and-desist letters to various online sportsbooks, iGaming sites, along with sweepstakes casinos, describing the platforms collectively as "online gambling sites" operating in violation of Mississippi gaming law.4 Similarly, New York Attorney General Letitia James in March sent cease-and-desist letters to 26 online platforms, including sweepstakes casinos and sportsbooks; in a press release announcing that the targeted companies had stopped operating in the state, the New York State Gaming Commission Chairman referred to the platforms as "so-called 'sweepstakes' games" and "illegal gambling."5 Tribal authorities' concerns that sweepstakes casinos are encroaching on their rights to be the exclusive purveyors of gambling under state gaming compacts have also animated the anti-sweepstakes push—the newly introduced California legislation has the backing of the California Nations Indian Gaming Association and the Tribal Alliance of Sovereign Indian Nations.6
As these enforcement actions and prospective bans proliferate, often targeting sweepstakes casinos alongside unlicensed sportsbooks and iGaming sites, they have the effect of obscuring the legal distinction between gambling and true sweepstakes. That distinction lies in the staking of something of value, or consideration. In all 50 states, the definition of gambling contains the element of consideration (along with chance and prize), meaning that patrons must risk or wager something of value for the chance to win a prize in order to engage in gambling.7 The traditional sweepstakes model, under which retail giveaways and promotions have long operated, negates the element of consideration in one way or another, often by providing a no-purchase-necessary alternative method of entry. Sweepstakes casinos have argued that they adhere to this model by offering a dual currency scheme, wherein one type of virtual coin is awarded to users for free and cannot be redeemed for money, and a second type may be either earned or purchased and, once awarded as a prize, redeemed for real money prizes. Critics of sweepstakes casinos argue that these platforms simply offer a form of unregulated gambling, as patrons are enticed (though not required) to spend real money on the chance to win real prizes through casino-style gameplay. This resemblance to traditional gambling has caused sweepstakes casinos to draw the ire of regulators, watchdogs, and the tribal gaming world.
Sweepstakes operators and their attendant industry groups like the Social and Promotional Games Association (SPGA) reject the characterization of sweepstakes casinos as a form of gambling. The SPGA has warned that broadly worded state bans may have wide-ranging consequences. For example, in response to Montana's recently enacted legislation—which prohibits "any platform, website, or application that knowingly transmits or receives gambling information, allows consumers to place a bet or wager using any form of currency, and makes payouts of any form of currency"—an SPGA spokesperson asserted that "Montana just criminalized everyday digital promotions with a law so broadly written it fails to name what it bans."8 The SPGA has further cautioned that New York's pending ban could expose entrepreneurs, payment processors, software vendors, and even investors to potential liability.9
It remains to be seen whether a majority of states will join the movement to prohibit the operation of sweepstakes casinos within their borders, or whether growing legal scrutiny of the sweepstakes model will instead open the door to collaboration between sweepstakes platforms and lawmakers. The latter could pave the way for greater regulation of sweepstakes casinos, providing legitimacy and transparency for the industry in much the same way that daily fantasy sports platforms achieved such a transformation.
For now, stakeholders in the sweepstakes gaming world should continue to monitor the varying and emerging state approaches to sweepstakes casinos. As is clear, the threats of regulatory enforcement action and litigation are present even in states that have not entertained prohibitive legislation. Sweepstakes platforms, payment processors, and others in the industry should retain experienced gaming counsel to help them navigate this shifting regulatory landscape.
Nelson Mullins summer associate Lindsay Cullum assisted with this blog.
Footnotes
1 Pat Evans, California Legislators Introduce Sweepstakes Casino Ban,Legal Sports Rep. (June 23, 2025), https://www.legalsportsreport.com/236431/california-sweepstakes-casino-prohibition-bill/.
2 Id. ; see S.B. 1235, 2025 Gen. Assemb., Reg. Sess. (Conn. 2025); S.B. 555, 2025 Leg., 69th Sess. (Mont. 2025); S.B. 256, 83d Leg., Reg. Sess. (Nev. 2025); S.B. 5935, 2025-26 Leg., Reg. Sess. (N.Y. 2025); Gen. Assemb. 5447, 221st Leg., Reg. Sess. (N.J. 2025).
3 Evans, supra n.1.
;Pat Evans, Louisiana Gov. Landry Vetoes Sweepstakes
Casino Ban,Legal Sports Rep. (June 13, 2025),
https://www.legalsportsreport.com/235700/landry-sweepstakes-casino-ban-veto/.
4 Jess Marquez, VGW and Other Sweepstakes Operators Face Tough Week Across the US as Legislators, Regulators Crack Down, iGaming Bus. (June 18, 2025), https://igamingbusiness.com/legal-compliance/sweepstakes-sites-legislation-regulation-crackdown/; Miss. Gaming Comm'n, Mississippi Gaming Commission Issues Cease and Desist Letters to Illegal Online Gaming Operators (2025).
5 Press Release, Off. N.Y. State Att'y Gen., Attorney General James Stops Illegal Online Sweepstakes Casinos (June 6, 2025).
6 Evans, supra n.1.
7 Anthony N. Cabot, Glenn J. Light & Karl F. Rutledge, Alex Rodriguez, a Monkey, and the Game of Scrabble: The Hazard of Using Illogic to Define the Legality of Games of Mixed Skill and Chance, 57 Drake L. Rev. 383, 390–91 (2009); Anthony N. Cabot & Louis V. Csoka, The Games People Play: Is It Time for a New Legal Approach to Prize Games?, 4 Nev. L.J. 197, 202.
8 Press Release, Soc. & Promotional Games Ass'n, Montana Just Outlawed Something it Couldn't Even Define (May 23, 2025), https://thespga.org/montana-sb555-response/.
9 Evans, supra n. 1.
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