We have seen dramatic evolution across the gaming industry throughout 2025. There have been noteworthy legal and regulatory developments for lottery couriers, prediction markets, sweepstakes casinos, and sports betting companies, among many others. The evolving legal landscape will affect operators, consumers, and policymakers.
Below, we summarize some of the important changes in the legal gaming landscape for the first half of 2025, from January 1 through June 30.
1. Sports Prediction Markets Continue to Grow
Sports-based events contracts allow participants to trade on binary outcomes of specific events. And in the first half of 2025, the regulatory framework regarding sports-based event contracts sparked significant interest and debate among market participants, regulatory bodies, and policymakers.
As one example, Kalshi's landmark legal battles set critical precedents that shape the conversation around sports-based event contracts. In September 2024, the U.S. District Court for the District of Columbia ruled in favor of Kalshi, affirming that Congressional Control Contracts constituted permissible futures products rather than gaming.1 This decision highlighted the nuanced interpretation of terms such as "gaming" and "involve" under the Commodity Exchange Act and paved the way for expanded offerings in the event contracts space such as sports-based event contracts. For more on event contracts, see Matthew Kulkin and Alexandrea Rahill's article, CFTC Regulation of Binary Event Contracts: A History.
Despite this, state authorities have expressed concerns over sports-based event contracts, with several issuing cease-and-desist orders, citing conflicts with state gaming laws. At the time of publication, several district courts and one appellate court are reviewing motions by event contract companies to block state regulators from enforcing gambling laws. Plaintiffs in those cases assert that any state actions would interfere with the exclusive authority of the Commodity Futures Trading Commission (CFTC) to regulate futures derivative contracts pursuant to the Federal Commodity Exchange Act.
The CFTC has yet to clarify its stance on sports-based event contracts. Some of this may be due to CFTC leadership continuing to transition under the Trump administration.2 Acting Chairman Caroline Pham has advocated for an open dialogue and a new framework for federal review of event contracts; however, she plans to depart once a new chair is confirmed.3 Meanwhile, nominee Brian Quintenz previously voiced support for congressional action, rather than CFTC action, to resolve potential conflicts with state gaming laws by clarifying the scope of events contracts through legislation.4 As legal challenges and regulatory uncertainty persist, the gaming industry awaits clear guidance that will determine the path forward for sports-based event contracts and related innovative products.
2. Sweepstakes and Social Casinos: Regulators, Legislatures, and Plaintiffs' Bar Take Aim
Sweepstakes casino games are online or mobile games for entertainment, using a sweepstakes model. Players use free virtual currency earned through purchases, tasks, or referrals to play casino-style games (e.g., slots, poker, roulette, sports betting, bingo) that offer a chance to win real money or prizes.
Sweepstakes casino games have seen a tremendous increase in popularity and profitability, especially in locations that place strong limits on real-money online play. Proponents of sweepstakes casino games assert that the games do not fit the traditional definition of gambling because they lack the required element either of a "prize or thing of value to be won" or of "consideration" or paying a cost to enter. Most of the profit from social casino games comes from in-game purchases or advertising revenues; when a player views an ad, the player can earn some compensation that can be used in gaming and the gaming company earns the spread between that compensation and the amount charged for the advertisement (less applicable costs).
Sweepstakes casino games have come under intense scrutiny in recent years, and this trend has continued during the first half of 2025. In the first six months of 2025, state regulators in Connecticut, Delaware, Maryland, and Michigan sent cease-and-desist orders to sweepstakes casino operators; state legislatures in Montana, Connecticut, New Jersey, and Louisiana passed legislation prohibiting sweepstakes casino games; and private litigants filed class action suits against operators as well as their service providers. Each of these categories is summarized below.
Regulatory Actions
State regulators have increasingly exercised their authority to crack down on sweepstakes casinos, leveraging state anti-gambling laws to target unlicensed operators. Both gaming control boards and state attorneys general have actively issued cease-and-desist orders, initiated enforcement actions, and provided legal opinions regarding the legality of sweepstakes platforms. This coordinated scrutiny underscores a growing commitment among state officials to address the proliferation of unregulated gaming.
In February, the Michigan Gaming Control Board issued nine cease-and-desist letters for violations of state gaming laws to operators of "unlicensed online casinos."5 Maryland's gaming regulator, the Maryland Lottery and Gaming Control Agency, followed suit in March by sending cease-and-desist letters to sweepstakes casinos offering their games in the state.6
In addition, several state attorneys general took action against sweepstakes casino operators in the first half of 2025, further intensifying regulatory pressure on the industry. In May 2025, the Connecticut Department of Consumer Protection Gaming Division reached a $1.5 million settlement with a gaming company that offers online sweepstakes casino games as one of its products.7 In June, New York Attorney General Letitia James announced that she sent cease-and-desist orders to 26 online casinos, asserting that "betting cash-redeemable virtual coins on games of chance constitutes gambling, regardless of how the casino operator characterizes how players can obtain the virtual coins."8 Louisiana Attorney General Liz Murrill likewise issued an opinion on July 2 stating that "it is the opinion of this office that online businesses offering casino-style games—purporting to be sweepstakes or social gaming platforms—are operating in violation of Louisiana law."9 There have also been reports that West Virginia Attorney General JB McCuskey issued subpoenas to sweepstakes operators in February 2025.10
These actions across multiple states highlight a growing effort to further regulate and monitor online gambling activities.
Legislation
In tandem with regulatory enforcement, several state legislatures have enacted laws to criminalize or prohibit sweepstakes casino games. These laws aim to clarify legal status and strengthen enforcement tools with regard to sweepstakes casino games.
Montana took the lead in 2025: Governor Greg Gianforte signed legislation on May 12 that bans any online casino that "allows consumers to place a bet or wager using any form of currency, and makes payouts of any form of currency."11 Connecticut Governor Ned Lamont on June 24 signed a law making it unlawful to promote sweepstakes that allow or facilitate participation in any real or simulated online casino game or sports wagering.12
Louisiana followed suit by passing a law that proposed to bar any game, contest, or promotion via the internet from utilizing a "dual-currency system" that allows players to exchange the currency for any prize, award, cash, or cash equivalent. Louisiana Governor Jeff Landry vetoed the legislation, stating that "The [Louisiana Gaming Control] Board is already taking active steps to combat illegal gambling in Louisiana, especially against illegal offshore wagering and illegal online sweepstakes companies operating in Louisiana. The Board's firm stance against such operations is aimed at protecting Louisiana residents from unregulated gambling activities that violate state laws."13
Meanwhile, on June 30, the New Jersey Legislature passed a law prohibiting sweepstakes casinos.14 That legislation is awaiting the signature or veto of New Jersey Governor Phil Murphy.
Litigation
The plaintiffs' bar likewise continues to be active in the space, filing class action suits against sweepstakes casino operators in Alabama, California, Illinois, Massachusetts, and New York.15 These suits allege fraud, breach of contract, unfair and deceptive trade practices, and violations of various state gambling loss recovery statutes.
In addition to actions against sweepstakes casino operators themselves, plaintiffs have filed lawsuits against service providers such as payment processors and app store providers. These cases generally assert that the service providers to online sweepstakes casinos willingly assist, promote, and profit from allegedly illegal gambling by, among other things: (1) making the apps available to users through their marketplaces; (2) collecting a share of in-app consumer purchases involving virtual currencies; and/or (3) facilitating transactions between consumers and sweepstakes casinos through their payment systems.
3. State Governments Hike Taxes on Sports Betting
Taxation remains a critical issue for sports betting operators, particularly as states increasingly turn to tax hikes to address budget gaps. Illinois, Louisiana, Maryland, and New Jersey all passed laws to increase taxes on sports betting, daily fantasy sports, or iGaming in the first half of 2025.
In early 2025, Illinois enacted a law that taxes sportsbooks $0.25 per bet on the first 20 million online bets statewide annually, and then $0.50 on every bet after that. Maryland increased taxes on sports betting gross gaming revenue from 15 percent to 20 percent16 after calls by Governor Wes Moore to double the 15 percent tax rate to 30 percent. Similarly, Louisiana approved a tax hike from 15 percent to 21.5 percent in House Bill 639, with a portion of the money going to fund college athletics in the state. New Jersey Governor Phil Murphy also signed legislation on June 30 to increase the state tax rates for internet gaming and online sports betting to 19.75 percent of gross revenue.
The trend signals two notable dynamics. First, states are increasingly relying on sports betting tax increases as a reliable mechanism to fill budget deficits. Second, states appear to favor these incremental tax hikes over introducing new forms of gaming, such as online casino games or skill machines, which have faced significant legislative resistance.
4. Lotteries: Texas and Indiana Move to Ban Couriers While Arizona Moves to Regulate
Lottery courier services, or lottery couriers, are third-party companies that purchase lottery tickets on behalf of their patrons at licensed lottery retailers. The process requires the courier company to have an employee within the jurisdiction to make an in-person purchase. The courier then scans and uploads the ticket or tickets purchased into the patron account, where it is then held.
This convenience of lottery courier service—allowing users to buy lottery tickets through an app instead of making a trip to the store—has fueled significant growth in the lottery courier sector. At the same time, lottery courier service has become a growing point of contention in each of several states.
In Texas, the Texas Lottery Commission issued a policy statement on February 24, 2025, that it intended to exercise its authority to halt lottery couriers in the state.17 The Texas Lottery Commission subsequently enacted regulations to "prohibit[] the use of lottery ticket courier services that, by any remote means, such as telephone, Internet application, or mobile application, accept and fulfill, for a fee or compensation, orders to purchase lottery tickets on behalf of another person not present to effect an in-person sale (couriers)." The Lottery Commission cited concerns about the integrity of the lottery system and consumer protections as justification for the action; however, the actions coincided with negative media attention surrounding a $95 million Lotto Texas win claimed by a single group that purchased 99 percent of the 25.8 million possible ticket combinations using a lottery courier service as well as a series of social media posts by Lieutenant Governor Dan Patrick in February 2025 suggesting that lottery courier services may be illegal in Texas.18 The Texas legislature then stepped in and passed a law prohibiting online sales of lottery tickets and abolishing the Texas Lottery Commission. Starting September 1, 2025, the lottery will be run by the Texas Department of Licensing and Regulation.
Indiana also moved to ban lottery couriers in May when Governor Mike Braun signed a law prohibiting lottery couriers from offering their services in the state. Both Indiana and Texas have followed the precedent set by states such as Virginia and Wisconsin, each of which has already enacted legislation prohibiting the use of lottery courier services.
Conversely, Arizona has adopted a more progressive approach to lottery courier services. In May 2025, the Arizona Lottery Commission chose to regulate—rather than ban—lottery couriers by publishing proposed rules to establish a comprehensive regulatory framework for couriers in the state.19 The rules must be approved by the Governor's Regulatory Review Council; however, if approved, Arizona would join New York and New Jersey as the third state to explicitly authorize lottery couriers through a regulated framework.
The evolving regulatory landscape surrounding lottery courier services reveals a clear trend: states are actively reassessing these services and are likely to pursue one of three policy approaches—upholding the status quo, instituting comprehensive regulation, or enacting outright bans. This divergence is evident as some jurisdictions, such as Texas and Indiana, opt for restrictive measures, while others like Arizona move toward establishing regulatory frameworks. Some jurisdictions have chosen to maintain the status quo, on the grounds that lottery couriers contribute to increased lottery sales and play a key role in promoting the state lottery through advertising, particularly in cases where state laws limit or prohibit advertising by the state lottery.
Simultaneously, the gradual adoption of iLottery and iGaming continues, with states such as Massachusetts authorizing iLottery in 2024 and planning to launch operations in the summer of 2026. As more states explore these digital gaming solutions, iLottery and iGaming stand poised to significantly disrupt the traditional lottery and gaming sectors by introducing new ways for consumers to play lotteries.
5. Conclusion
Recent developments highlight a rapidly evolving gaming landscape, with states reassessing the legality and regulation of event contracts, sweepstakes casinos, and lottery courier services. Legislatures are increasingly turning to gaming tax hikes as preferred solutions for revenue, while approaches to lottery couriers now range from outright bans to comprehensive regulatory frameworks. As states continue to refine their approaches to the gaming industry, stakeholders must stay vigilant to navigate this evolving landscape. The second half of the year promises further shifts, making it imperative for industry players to adapt proactively.
Footnotes
1. KalshiEX LLC v. Commodity Futures Trading Comm'n, No. CV 23-3257 (JMC), 2024 WL 4164694 (D.D.C. Sept. 12, 2024) (reasoning that the term "gaming" did not apply to election contracts and that the contracts did not involve illegal activity under federal or state law).
2. See Matthew Kulkin and Alexandrea Rahill, Wilmer Cutler Pickering Hale and Dorr LLP, CFTC Regulation of Binary Event Contracts: A History (Apr. 25, 2025), https://www.wilmerhale.com/en/insights/publications/20250430-cftc-regulation-of-binary-event-contracts-a-history.
3. CFTC, 100 Days: Keynote Address by Acting Chairman Caroline D. Pham, 39th ISDA Annual General Meeting (May 15, 2025), https://www.cftc.gov/PressRoom/SpeechesTestimony/opapham15.
4. CFTC, Statement of Commissioner Brian D. Quintenz on ErisX RSBIX NFL Contracts and Certain Event Contracts (Mar. 25, 2021), https://www.cftc.gov/PressRoom/SpeechesTestimony/quintenzstatement032521.
5. Michigan Gaming Control Board, Michigan Gaming Control Board issues cease-and-desist letters to nine unlicensed online casinos (Feb. 12, 2025), https://www.michigan.gov/mgcb/news/2025/02/12/cease-and-desist-letters-issued-to-nine-unlicensed-online-casinos.
6. Maryland Lottery and Gaming Control Agency, Legal vs. Online Gaming, https://www.mdgaming.com/legal-vs-illegal-online-gaming/.
7. Connecticut Department of Consumer Protection, Department of Consumer Protection Announces Settlement with High5Games over Operation of Illegal Online Casino (May 29, 2025), https://portal.ct.gov/dcp/news-releases-from-the-department-of-consumer-protection/2025-news-releases/department-of-consumer-protection-announces-settlement-with-high5games?language=en_US.
8. New York Attorney General, Attorney General James Stops Illegal Online Sweepstakes Casinos (June 6, 2025), https://ag.ny.gov/press-release/2025/attorney-general-james-stops-illegal-online-sweepstakes-casinos.
9. Louisiana Attorney General, Opinion 25-0083 (July 2, 2025), https://www.ag.state.la.us/Opinion/Download/25-0083.
10. See Casino Reports, Source: West Virginia Attorney General Serves Subpoenas To 'Sweepstakes' Operators (Feb. 7, 2025), https://www.casinoreports.com/source-west-virginia-subpoenas-sweepstakes/.
11. Montana Legislature, SB 555 (Generally revise gambling laws), https://bills.legmt.gov/#/laws/bill/2/LC2686?open_tab=bill.
12. Connecticut Legislature, S.B. 1235, An Act Concerning the Department of Consumer Protection's Recommendation Regarding Lottery and Gaming Regulation, https://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=SB01235&which_year=2025.
13. See letter from Governor Jeff Landry to the Honorable Cameron Henry, President of the Senate, and Yolanda Dixon, Secretary of the Senate, regarding Senate Bill 181 of the 2025 Regular Session by Senator Adam Bass (June 12, 2025), https://www.legis.la.gov/legis/ViewDocument.aspx?d=1425301.
14. New Jersey Legislature, Bill A5447 Aca (1R), https://www.njleg.state.nj.us/bill-search/2024/A5447.
15. See, e.g., Sumerel v. High 5 Games, No. 33-CV-2005-900079.00 (Ala. Cir. Ct. June 9, 2025); Carrillo v. VGW Holdings US, No. 5:25-cv-00349 (C.D. Cal. Feb. 5, 2025); Urdan v. Sweepsteaks Limited, No. 1:25-cv-03736 (N.D. Ill. Apr. 7, 2025); Deleon v. Sweepsteakes Limited, No. 1:25-cv-11481 (D. Mass. May 23, 2025); Boatner v. SSPS, LLC, 1:25-cv-03251 (S.D.N.Y. Apr. 18, 2025).
16. Maryland, Budget Reconciliation and Financing Act of 2025, House Bill 352, https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/hb0352.
17. Texas Lottery Commission Policy Statement on the Prohibition of Lottery Ticket Courier Services (Feb. 24, 2025), https://www.texaslottery.com/export/sites/lottery/Documents/legal/TLC-COURIER-POLICY-DOCUMENT-V2-02242025.pdf.
18. See, e.g., X.com, Dan Patrick (Feb. 19, 2025, at 2:34 PM), https://x.com/danpatrick/status/1892296816202232102?s=12 ("ICYMI: Recently, there have been many questions raised about the integrity of the Texas Lottery. On Monday night, an $83 million winning ticket was sold in Austin. Turns out, the retail establishment that sold the winning ticket in the front of the store was owned by the courier service that purchased the ticket behind the wall in the back of the store. I decided to go out and investigate for myself. #txlege").
19. Arizona Lottery, Proposed Rules Regarding the Authorization of Lottery Courier Services in Arizona (May 23, 2025), https://www.arizonalottery.com/media/uznnpopa/complete-proposed-lottery-courier-rules-for-submission-june-26-2025.pdf; see also Arizona Administrative Register, Volume 31, Issue 21 (May 23, 2025), https://apps.azsos.gov/public_services/register/2025/21/contents.pdf.
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