Sweepstakes Casinos Await Next Roll Of Dice After California, New York Bans
SAN JUAN, Puerto Rico – Sweepstakes casino operators want gambling regulators to think about McDonald's when it comes to either regulating or banning their products. But some legislators and regulations believe that approach is simply one whopper of a mischaracterization.
Sweepstakes operators and their advocates used the moniker of "Social Plus Casinos" Thursday to describe what they do during the opening session of the National Council of Legislators From Gaming States.
Seven states - including New York and California - have enacted outright bans on the two-currency system legislators said sweepstakes casinos engineered to “circumnavigate” gambling laws while maintaining a façade of legality. Together, New York and California closed the two most profitable markets in the U.S.
"We want to be regulated by the states and pay taxes," said Jeff Duncan, Executive Director of the Social Gaming Leadership Alliance, an industry trade group. "These are adult games. We have sweepstakes laws that govern gaming, but we're trying to do in the 21st Century," added Duncan, a former South Carolina congressman.
Duncan likened the Gold Coins used by sweepstakes casino operators to the "Monopoly" game offered by McDonald's, or the "Publishers Clearing House" sweepstakes.
National Council of Legislators From Gaming States President Shaun Fluharty, a member of the West Virginia Legislature, said "sweepstakes offer illegal gambling and revenue threat."
Wherever sweepstakes casinos have been either banned or face cease-and-desist orders, the redeemability of the Gold Coins to real money is the key issue. "This is illegal gambling. That's the whole argument. Social plus is a great pivot and politicking, but not great policy. If you buy $30 sweeps coins for 30 coins, that's a redeemability issue. It's hard to argue you're separate from an iGaming model," Fluharty said.
Line Drawn Between 'Social Plus Casinos' & 'Illegal Gambling'
Fluharty echoed the position held by regulators and legislators in the 6 states that have banned the so-called "Gold Coin" element offered by sweeptakes operators. He said some 23 states have taken action against sweepstakes operators.
"The record shows that you're 0-for-the-year when trying to work with states," Fluharty said. "McDonalds is in the business of burgers. You're in the business of online casino games," adding that promotions used by companies like McDonald's are temporary.
"You are operating in our states and 50% of all the ads we see" are from illegal markets, especially on social media, Fluharty said. "That's like the moonshiner advertising next to Anheuser-Busch. We agree that this represents illegal gambling,"
Brian Schroeder, General Counsel at ARB Interactive. said "Social Plus Casinos" offer "robust age verification" in addition to geolocation compliance. He noted that whenever a state enacts a ban, "the bad operators stay."
Panelists could not agree on the size of the sweepstakes casino industry, floating figures between $4 billion and $14 billion.
"Social gaming companies with a sweepstakes promotion are subject to audits and age verification," Schroeder said. "I don't like the Kalshi approach, that's a short-term play. Long term we want to educate you. Our product has been in place for 10 years. It's a social, free-to-play game that is legal. Social Plus operators are new to the space. It will take time. It's a marathon, not a sprint."
"States look at this as illegal gambling."
Fluharty clapped back at the McDonald's comparison. "If it walks like and talks like a duck - it's a duck," he said. "States look at this as illegal gambling."
States may consider using the proliferation of sweepstakes casinos to enact iGaming laws. But sweepstakes casino operators counter that they are being used as "pawns" by licensed gaming operators to pass online casino legislation.
"This comes under the modernizing the regulatory structure," Duncan said. "We need to differential between sweepstakes regulation and gambling regulation."
And in the states that have enacted bans, Schroeder said "our strategy is to turn off sweepstakes coins, explain what we offer, that your sweepstakes laws are 1950, and you should modernize those protections. We are stating that process. It does take time."
What Are Sweepstakes Casinos?
Sweepstakes casinos spent the past several years operating in a legal gray zone that infuriated lawmakers, tribal nations and regulated gaming operators. They became one of the biggest storylines in 2023 and 2024 — until prediction markets overtook them this year — largely because of their billion-dollar growth and their billion-dollar loophole.
Unlike traditional online casinos, sweeps sites don’t accept money directly on games. Players instead buy Gold Coins — tokens with no cash value — for entertainment. In return, they may receive Sweeps Coins as a “free promotional bonus.” Those Sweeps Coins can then be redeemed for real cash prizes. In practice, it looked and felt like online casino gambling. In theory, it let companies argue they weren’t violating state anti-gambling laws.
Users treat the sites like casinos anyway: spinning slots, playing blackjack, and chasing payouts.
At October’s Global Gaming Expo in Las Vegas, American Gaming Association President Bill Miller escalated the industry’s pushback and all but declared war on sweepstakes casinos, prediction markets, and offshore operators.
“Sweeps operators in California brag about economic impact they allegedly generate. Nearly every penny goes to buying digital ads,” Miller told the crowd. “Why all this deception? Simple: they want the opportunity … but without any regulatory compliance or any concern for the public good. These illegal actors aren’t fooling anyone. Our own research found that 90% of sweepstakes customers call what they’re doing ‘gambling.’”
Miller closed with a line aimed squarely at the business model itself:
“You can call it a sports event contract … a skill game ... a sweepstakes … you can call it whatever you want. But it’s still gambling. And if it’s gambling, it needs to play by rules that uphold state and tribal sovereignty.”
Five other states have already banned sweeps casinos entirely:
• Montana
• Washington
• Idaho
• Connecticut
• New Jersey
Each cited the same concerns: no consumer protections, unfair competition with legal gaming, and widespread user confusion. California’s law specifically targets the Gold Coin/Sweeps Coin model — a framework other states are now studying closely. Florida (HB 591) has similar legislation in committee, with a companion in the Senate ahead of the 2026 session. Massachusetts, Maine, and Ohio are weighing comparable bans. Nevada hasn’t passed a formal prohibition but has used aggressive legal action to run most operators out of the state.
Several of these same states are also battling Kalshi and Robinhood in court over their sports-event contract markets, signaling a broader crackdown on any product that resembles wagering without regulation.
The Sweeps Industry’s Uncertain Future
With bans in California, New York, and New Jersey, the sweepstakes casino industry enters 2026 with an existential crisis. Some operators may retreat to smaller states or attempt a rebrand as “entertainment-only” platforms. Others may lobby for a regulated on-ramp similar to online casinos. None face favorable odds.
A business that soared from obscurity to billions in a few short years now stands on the edge of a cliff. When California’s ban takes effect Jan. 1, the Golden Era of Sweepstakes Casinos officially ends. Whether a new era — regulated, transparent, and tribe-aligned — replaces it remains an open question.
"Be interested to see how the chips fall in a year," Fluharty said.
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