Regulation of Sweepstakes-based Gambling Models Across US Gathers Pace

WASHINGTON, July 7, 2025 - The vast gambling market in the US, with all 50 states governed by separate laws, is now seeing a tightened regulation for sweepstakes-based gambling models.

Last month, Connecticut became the second state to officially prohibit the use of online sweepstakes casinos.

On June 10, New York Attorney General Letitia James, in a major crackdown led to cessation of operations for 26 illegal online sweepstakes casinos.

However, on June 13, Louisiana Governor Jeff Landry vetoed the Senate Bill 181, which aimed to prohibit online social games utilizing sweepstakes promotions across the state.

The Louisiana House had unanimously approved instituting a ban on sweepstakes, a measure that also passed in the Senate.

Several states have proposed legislation regarding sweepstakes, a contentious topic among lawmakers. Louisiana legislators have also approved bans on other forms of betting.

Connecticut and New York’s recent decisions against sweepstakes-based gambling models are just a tip of the iceberg. There is a larger, developing national trend toward regulation of these models.

The models are being probed throughout the United States for their reputation of using regulatory loopholes to exploit, typically marketing themselves as promotional games instead of wagering sites.

Notably, VGW, the parent company of prominent sites like Chumba and Global Poker, had made public its withdrawal from the New York market well before Attorney General James’s public clampdown.

Enforcement and Industry Opinion

In March this year, Arkansas lawmakers hinted to ban sweepstakes gaming and legalize online casinos.

There was an effort to push for both the legalization of iGaming for three land-based casinos and for the prohibition of online sweepstakes casinos operating within the Natural State. 

Sponsored by Senator Dave Wallace and Representative Matt Duffield, SB524 and HB1861 sought the creation of the Interactive Gaming Act, which would grant three land-based Arkansas casinos licenses to operate iGaming.

Soon after Connecticut Governor, Ned Lamont chose to sign Senate Bill 1235 into law on June 11, becoming the second state to officially prohibit the use of online sweepstakes casinos, Social and Promotional Games Association (SPGA) released a statement.

The Association stated it is “frustrated” by Governor Lamont’s decision, asserting that such gaming types “have long operated under well-established legal frameworks and provide safe, free-to-play entertainment for millions of American adults.”

However, Social Gaming Leadership Alliance (SGLA) also released an official statement regarding Louisiana Governor Jeff Landry’s decision to reject Senate Bill 181 on June 13, which looked to prohibit online social games utilizing sweepstakes promotions across the state.

“On behalf of the Social Gaming Leadership Alliance (SGLA) and the Louisiana residents who enjoy free-to-play online social games, we sincerely appreciate the opportunity to continue the conversation about online social gaming in Louisiana,” SGLA Executive Director Jeff Duncan was quoted as having said.

Classic Case of New York

The Attorney General’s office in cooperation with the New York State Gaming Commission launched a detailed investigation into sites, which were operating illegally under state law by engaging people in gambling using virtual money that could be converted into real money or significant prizes.

The probe highlighted that these sites were operating illegally under state law by engaging people in gambling using virtual money that could be converted into real money or significant prizes.

The State Gaming Commission Chairman Brian O’Dwyer vetoed the position of the Attorney General, saying these sites are “unscrupulous, unsecure, and unlawful.”

Senator Joseph Addabbo Jr. expressed concern about the “potential exploitation of vulnerable groups, especially young people.”

In New York law, any game that provides valuable winnings, either in the form of cash payments or exchangeable digital tokens, is categorically deemed gambling and thus subject to strict state regulation.

A question often posed is whether Clubs Casino is legal or not.  It is legal in the vast majority of US states, excluding Idaho, Louisiana, Nevada, Michigan, Montana and Washington.

Regulation in Other States

On July 2, the Michigan Gaming Control Board (MGCB) issued cease-and-desist letters to 19 illegal online gaming operations in the state. The Board also launched an investigation into several other casinos.

Following an investigation, the Delaware Division of Gaming Enforcement (DGE) sent a cease-and-desist to Australian-based VGW Luckyland for operating sweepstakes in the Diamond State.  

It was concluded by the regulator that VGW Luckyland had labelled its services as sweepstakes. However, this was concluded to be a misrepresentation, as the operator allowed players to purchase coins for casino-style play, with cash prizes available.

As a result, VGW Luckyland was in violation of the Delaware Constitution, the Delaware Penal Code and the Delaware Gaming Competitiveness Act of 2012.

In another case, the Arizona Department of Gaming recently sent cease-and-desist letters to several operators for “illegally targeting Arizona residents.” These operators were both inside the US and offshore.

Connecticut and New York’s recent decisions against sweepstakes-based gambling models are just a tip of the iceberg. There is a larger, developing national trend toward regulation of these models.

Inputs from Saqib Malik

Editing by David Ryder