US Sweepstakes Casinos in 2025: Market Contraction Amid Rising Legal & Regulatory Pressure

In 2025, the U.S. sweepstakes casino segment — once a rapidly growing gray-market alternative to regulated iGaming — contracted sharply as legislative bans, regulatory enforcement actions, and litigation intensified. By December, sweepstakes casino operators had shifted their strategy: growth was no longer the baseline — survival and damage control were.

Updated on 6 January 2026

State Legislative Bans: Six States Have Enacted Prohibitions

In 2025, six U.S. states enacted explicit statutory bans targeting sweepstakes casino operations:

  • California: In October, Governor Gavin Newsom signed Assembly Bill 831, which outlaws dual-currency sweepstakes casinos, effective January 1, 2026, with broad enforcement authority that includes affiliates and payment providers. California’s move marked a significant blow to the segment as the state accounts for nearly 20% of the U.S. revenue, according to some reports.
  • New York: The nation’s fourth most populous state also outlawed sweepstakes casinos. Governor Kathy Hochul signed Senate Bill 5935A in early December, although most operators had already exited the state following an earlier crackdown by New York State Attorney General Letitia James.
  • Montana sparked the prohibitions by becoming the first state in 2025 to pass an explicit prohibition in late May.
  • Connecticut and New Jersey followed in the summer. Meanwhile, Nevada enacted legislation that stops short of an explicit ban. Still, it gave the state more power to target and prosecute unregulated operators, effectively forcing most sweepstakes casinos out of the state.

These six states joined Idaho, Washington, and Michigan. The three states have long been off-limits for sweepstakes casinos due to state laws or enforcement actions.

Regulatory & Enforcement Actions Drove Additional Exodus

Beyond explicit legislative bans, state enforcement actions by attorneys general and gaming regulators played a central role in the market contraction:

  • Louisiana: The governor vetoed a ban bill that passed in the Legislature in the summer. However, soon after, the Louisiana Gaming Control Board issued over 40 cease-and-desist orders. Additionally, the state’s Attorney General Liz Murrill issued a legal opinion declaring sweepstakes casinos illegal. Together, those actions triggered a mass withdrawal of operators from the state.
  • West Virginia: In July, West Virginia Attorney General John McCuskey announced that he had sent 47 subpoenas to sweepstakes casino operators. As a result, more than 40 platforms have ceased operations in the state.
  • Tennessee: Since late November, over 30 platforms exited Tennessee. While initially there was no information on what drove them out, on December 29, Attorney General Jonathan Skrmetti announced that he had sent nearly 40 cease-and-desist orders to sweepstakes casino operators.
  • Delaware: Cease-and-desist orders issued by the Delaware Division of Gaming Enforcement have led to over 30 platforms exiting the state.
  • Maryland: The Maryland Lottery and Gaming Control Commission has successfully forced more than 20 operators to leave the state via enforcement actions.
  • Additional crackdowns in Arizona, Mississippi, and Minnesota have resulted in a limited number of sweepstakes casinos ceasing operations in those states.
  • Kentucky: Although there have been no confirmed enforcement actions by either the Attorney General or gaming regulators, over 30 platforms have exited the Bluegrass State.

Collectively, the regulatory pressure in non-ban states has effectively reduced operator footprints even without formal prohibition statutes.

Litigation Surge: Over 100 Class Action Lawsuits Filed

In addition to legislative and regulatory crackdowns, class action litigation against sweepstakes casinos surged in 2025, with more than 100 filed nationwide. Most allegations center on claims that dual-currency sweepstakes casinos constitute illegal gambling and have engaged in deceptive practices:

Litigation filings have targeted virtually every major operator. VGW, the operator of Chumba Casino, LuckyLand Slots, Global Poker, and LuckyLand Casino, faces more than 20 suits. Others, such as Sweepsteaks Limited (Stake.us), A1 Development (Funrize, NoLimit Coins, and others), and B2 Services (McLuck, Jackpota, Hello Millions, and others), face at least five complaints each.

States like Utah and Alabama have emerged as litigation hotspots due to strict anti-gambling statutes.

Some lawsuits also name payment processors and even ambassadors as defendants. Rapper Drake and streaming influencer Adin Ross were named as defendants in three lawsuits against Stake.us. Separately, slot influencer Brian Christopher and media personality Ryan Seacrest were named as defendants in lawsuits against VGW in California.

These lawsuits have not led to operators withdrawing from these markets. Still, the volume and scope have intensified concerns about operational risk, defense costs, and the sustainability of the sweepstakes business model.

Provider’s Exits and Shifting Operator Strategy

The increased pressure on the segment has led to shifting strategies for operators and content providers.

Notably, Pragmatic Play, arguably the most popular and widely available game provider, decided to exit the U.S. sweepstakes segment. Meanwhile, other gaming giants, such as Evolution and Playtech, moved to limit their content in some states. That included California, ahead of the ban’s enactment, and most recently Illinois.

Multiple smaller providers, such as Booming Games, Live88, Fat Panda, and Just Slots, also limited their content on various platforms connected to enforcement actions.

The shrinking market and reduced partnerships with content providers have forced some operators to adopt a new strategy. They’ve introduced new platforms to offset revenue losses and preserve their market share:

VGW has already added a new platform, LuckyLand Casino, and plans to roll out another, Just Slots, in early 2026.

A1 Development introduced Stormrush. Meanwhile, UTech Solutions, which is unconfirmed but likely related to A1, has rolled out six sites in 2025.

Meanwhile, Blazesoft, the parent of Fortune Coins and Zula, has launched American Luck. It’s also preparing to add Luck Party to its ecosystem.

Furthermore, MW Services Limited, the operator behind WOW Vegas, launched two platforms this year.

Outlook: More Pressure Expected in 2026

Multiple indicators suggest that 2026 will bring additional legal and regulatory challenges:

Bans and prohibition bills are already pre-filed in Iowa, Maine, Indiana, and Florida, signaling broader legislative interest. First hearings are scheduled for each proposal in January or February.

Ban bills tied to the legalization of online casinos in Illinois and Massachusetts carry over to 2026. While those measures are widely expected to fail, standalone prohibition bills aimed at sweepstakes casinos may still appear.

Enforcement by attorneys general and regulators is likely to continue expanding. An example is Florida’s AG, James Uthmeier, who recently said he sent subpoenas to some operators. Additional state authorities will likely continue refining tools to characterize sweepstakes models under gambling statutes.

Ongoing and new class actions will sustain litigation pressure that could depress operator valuations and deter new entrants.

Taken together, these developments forecast continued contraction of the sweepstakes casino segment in the U.S. market through 2026 and potentially beyond.