For anyone who has been following the news even casually, one topic that continues to make headlines in the United States is sweepstakes social casinos. These platforms have been around for years, offering casino-style games without falling directly under gambling regulations.

They operate under a unique legal model that uses mock-up currencies like "Gold Coins," which can be obtained for free and used to play games with the potential to redeem prizes. This system allows players to participate without making real-money deposits (although many still do), positioning sweepstakes casinos as a legal alternative to traditional online gambling in many states.

The issue arises from the fact that while sweepstakes social casinos advertise free play and no-deposit-required gameplay, many run an alternative currency, usually "Sweeps Coins," that makes it possible to cash out real money in one form or another. Sweepstakes, argue the supporters of the model, however, are completely legal and aligned with precedent.

What is happening with sweepstakes in the United States?

The sweepstakes social casino sector in the United States is under assault on multiple fronts. Montana made history in May, becoming the first state to outlaw these websites (notwithstanding Idaho and Washington, which have had restrictions in place for decades). Governor Greg Gianforte signed Senate Bill 555 into law, which is due to take effect on October 1, 2025.

However, the law does not specifically single out sweepstakes social casinos but rather passes a blanket restriction against any type of casino that accepts any currency online, which prompted what is probably all major operators of sweepstakes casinos to exit the Treasure State, including the owners of popular brands Chumba Casino and LuckyLand Slots.

Mike de Graaff, Chief Compliance Officer at BetComply, said: "The rise of sweepstakes casinos poses the biggest challenge yet to the post-PASPA consensus on US betting and iGaming.

This is part of a broader trend in the US where existing regulatory frameworks are being reinterpreted by new entrants, including sweepstakes casinos, prediction markets, and even investment platforms."

The Social and Promotional Game Association (SPGA), one of the first trade groups to have rallied the industry and proclaimed itself against the backlash against the sweepstake sector, has heavily criticized Montana’s decision.

The SPGA issued a statement in which it did not waste time in criticizing the state legislature, arguing that the state "had outlawed something that it could not even define."

"Montana just criminalized everyday digital promotions with a law so broadly written it fails to name what it bans. It’s a dangerous precedent that could undermine consumer trust, business innovation, and long-standing legal marketing practices," a SPGA spokesperson said at the time.

Yet, Montana is not an outlier. The sweepstakes model has been coming under assault in the United States as a whole. Most recently, Connecticut and Louisiana sought an outright ban on sweepstakes, with both states trying to outlaw the activity, but only one succeeded.

Louisiana’s legislature passed a unanimous draft law that eventually died at the governor’s desk, with Gov. Jeff Landry arguing that a new law was unnecessary given how effective existing regulations already were.

Connecticut, however, went straight ahead with Governor Ned Lamont signing Senate Bill 1235 into law, and effectively becoming the second state this year, after Montana, to ban the activity outright.

Then, there is New York, which has passed a measure that will phase out promotional sweepstakes play with VGW announcing that it plans to suspend its Sweeps Coins offer, i.e., the currency that can be redeemed for cash or gift cards. Gold Coins, though, are supposed to remain operational, as they exemplify the free-to-play gameplay advertised by operators.

Is antagonism the only way forward?

In the meantime, New York’s Attorney General Letitia James served 26 cease-and-desist letters to various social and sweepstakes casinos, calling them illegal, and insisting on their immediate withdrawal from the Empire State.

This is not the only trouble the sweepstakes faces in New York, as Gov. Kathy Hochul is now deliberating whether to sign Senate Bill 5935, which effectively bans online sweepstakes games and "revenue from illegal markets."

Similar attempts to outlaw sweepstakes failed in other places, with Arkansas, Maryland, Florida, and other states seeking legislation introducing measures that would have banned the activity, but none of the measures passed.

This is not to say that these states and lawmakers won’t try again, but so far, they have come up empty-handed in at least several important cases, notwithstanding the success in Connecticut in mid-June.

Not everyone is worried about recent developments, however, and despite the growing hostility towards the sector, there are reasons to be optimistic as well. LuckyStreak Commercial Director Rory Kimber is not convinced that the path for sweepstakes forward is one of disappearance.

"I think overall there is some nuance to this. As certain areas in the US close off sweepstakes, other states will boom," Kimber explained. "We have already seen a huge uptick in interest for responsible providers and games from states where sports betting and online casinos are not yet regulated. I also see a steady path ahead on a global level - although perhaps not a repeat of the explosion we've just witnessed," he added.

How is the sweepstakes industry taking these developments?

As explained earlier, sweepstakes social casinos are up in arms. The first pushback came from the newly formed SPGA, which argued that lawmakers are attacking a sector at the behest of the regulated gambling industry, without fully understanding the facts behind the sweepstakes model.

The SPGA sought to explain "the facts" about the sweepstakes model, and it has repeatedly said that major brands such as Pepsi, Coca-Cola, Nike, and others use sweepstakes to reward consumers.

Another trade group formed recently by VGW, the Social Gaming Leadership Alliance (SGLA) gave an example of how Microsoft, a software company, runs a $2,000,000 sweepstakes contest for its users. VGW is not a member of the SPGA.

Similar to SPGA, the VGW-trade group is looking to set the record straight and ensure that: "the facts about our games, operations and standards are understood, and advocate for what we believe the appropriate industry frameworks should look like."

Both the SPGA and SGLA have issued repeated statements commenting on any attempts to outlaw the activity, reminding lawmakers of why their arguments went against established precedent, and repeatedly bringing up the fact that sweepstakes social casinos are enjoyed by millions of Americans.

Legally, both trade groups have a point, and pushing back against sweepstakes social casinos specifically (and not against all casinos, as is the case with Montana) may be difficult. Which brings us to the next question – what is next?

Will others succeed in implementing Montana’s example

The question now is what the future holds for the sweepstakes sector. Is this a momentary blip on the radar in which legislators are acting in unison as the mainstream gambling industry becomes more competitive, and the focus is on concentrating all potential gaming revenue?

Or is this a fight that will define the years to come? The truth is that what will most likely happen in the short term is for individual states to try and challenge sweepstakes operators, with many successfully reducing the market share of popular companies in places such as Connecticut, Delaware, New Jersey, Pennsylvania, Rhode Island, West Virginia, and elsewhere.

"I don't see there being a quick resolution. This will drag through the courts over the coming years, often on a state-by-state basis, but what is clear is that the days of sweepstakes casinos flying under the radar are over,"de Graaff added.

Although banning sweepstakes across the nation is unlikely to materialize in full, individual states will continue to tilt at that windmill, reducing companies’ market share and, in some cases, even forcing them to pay penalties, as we saw recently in Connecticut.

The sector is unlikely to disappear as both the SGLA and SPGA have a point that sweepstakes are well-established in legal precedent. Yet, this does not mean that the sweepstakes social casino sector will enjoy the same level of freedom as it has before, nor that its future is guaranteed.

Kimber chose to wrap up on a positive note: "Sweepstakes have a unique edge in the US market that we don't believe this recent wave of restrictions will dampen. Our position is to sit tight and hold your nerve - sweepstakes are here to stay."

Image credit: Unsplash.com