Is the End Close for Sweepstakes Casinos?

The sweepstakes casino bubble is close to bursting. After riding a post-pandemic high for several years, where a sweepstakes boom allowed Chumba Casino, Stake.us, and others to rake in millions of players, these sites are now facing legal controversy. Ongoing state bans and a rise in casino complaints from sweepstakes players have sent a thriving industry into a spiral, with no clear end in sight.

A Growing Number of States Are Banning Sweepstakes Casinos

Over the past year, a significant number of states have decided to start banning sweepstakes casinos, despite the tax revenue they generate.

New York and California are the biggest states to join the trend so far, causing major player drops for the leading sites.

Connecticut, New Jersey, Michigan, Montana, Nevada, Louisiana, and Washington have all explicitly banned sweepstakes casinos, while several other states, including Indiana and Florida, are actively pushing their own bills to have them outlawed.

It’s not good news for the likes of WOW Vegas and Pulsz, who have benefited massively from an influx of Gen Z and Millennial players this decade, many of whom have been inspired by sweepstakes casino streamers on Kick and Twitch.

The anti-sweepstakes movement comes from states agreeing that sweepstakes casinos, often referred to as ‘social casinos’, are a loophole for unregulated gambling with real-world prizes.

Attorney General James called online sweepstakes casinos “illegal, dangerous, and capable of seriously harming people’s finances,” and praised Senator Addabbo and the New York State Gaming Commission for working with his office to safeguard New Yorkers.

Assemblymember Avelino Valencia said “We cannot look the other way while these platforms exploit legal grey areas,” and that “AB 831 strengthens that framework and ensures gaming in California remains fair and accountable.”

Players on these sites can bet virtual Sweeps Coins and eventually redeem them for prizes like gift cards and cryptocurrencies if they collect enough.

In the eyes of these states, this is unregulated gambling and needs to be cracked down on. 

The Social Gaming Leadership Alliance, Founded by Sweepstakes Operators, Fights Back

Once it became clear that more states were going to start banning sweepstakes casinos, the Social Gaming Leadership Alliance was launched in 2025.

Founded by VGW, the operator behind Chumba Casino and Luckyland Slots, other members also include Publishers Clearing House, PLAYSTUDIOS, and Yellow Social Interactive.

The group is designed to represent the interest of social gaming providers and has spent the past several months pushing back against recent state bans.

Interestingly, the SGLA is urging lawmakers in Indiana, another big state looking to ban sweepstakes casinos, to stop their proposed House Bill 1052.

SGLA leaders have proposed a regulatory framework to Indiana that would potentially earn the state upwards of $20 million per year via player purchases, although the state has yet to publicly respond.

The belief from the SGLA is that they will be able to reverse or prevent other states from banning sweepstakes casinos further down the line, but even millions generated in tax revenue might not be enough to convince them.

Sweepstakes Operators Exit Tennessee After New Anti‑Gambling Bill

It’s also been bad news for sweepstakes casino players in Tennessee, with some sweepstakes casinos deciding to exit or scale back their offerings in the state following its recent HB1885/SB2136 anti-gambling bill.

A1 Development, the operator behind sweepstakes casino brands like NoLimitCoins and FunzCity, has blocked access to all of its sites in Tennessee,

VGW has also phased out Sweeps Coins gameplay for Chumba Casino, Luckyland Slots, and Global Poker in the state, while Stake.us, High 5 Casino, and others also do the same. 

This is a protective move from operators, as exiting Tennessee now will ultimately prevent them from future legal problems if the proposed bill is indeed passed into law.

The Sweepstakes Casino Market Set for 10% Revenue Decline in 2026

With all the controversy surrounding sweepstakes casinos, the market itself is set to experience a major revenue drop by the time 2026 wraps up.

From 2020 up until 2024, the industry was flying, but recent state bans and other legal problems mean the sites are no longer pulling in the same amount of money during the initial sweepstakes boom.

Eilers & Krejcik Gaming projects that the sweepstakes casino industry’s net revenue will be around $3.6 billion in 2026, a 10% decline.

And with more states set to ban sweepstakes casinos over the coming year and beyond, the projection for 2027 will likely be even lower.

Players Complaints and Lawsuits on the Up

Players are starting to complain in bigger numbers, too, with a growing list of player-filed lawsuits on the up.

The most high-profile ones have been those filed against Stake.us, with several of these lawsuits also naming Drake and Adin Ross as defendants following their marketing association with the ‘Stake’ brand.

Most recently, a Virginia class action lawsuit was filed by LaShawnna Ridley and Tiffany Hines, who are seeking up to $5 million in damages from Stake.us after complaining they lose money on the site after being influenced by Drake and Ross’s association.

It was only last year when the hugely popular High 5 Casino was ordered to pay out $25 million in damages to players after it was deemed to have been unlawfully operating in the state of Washington.

Although player lawsuits aren’t as harmful as the state-wide bans going on, it’s a clear indication that negative sentiment is building against sweepstakes casinos from players who feel they’ve been duped by the virtual dual-currency system the sites use.

Sweepstakes Casinos Remain Legal in Over 40 States

Many states in the US may be turning against sweepstakes casinos and cutting off their player bases, but the sites themselves still remain legal in over 40 of them.

At least for now, it will allow sites like Stake.us and Chumba Casino to continue operating while still generating significant revenue.

The concern for these casinos, though, is that if states continue to join the anti-sweepstakes casino trend, it won’t be long before the number of available states for players drops below 30.

New York and California have now set the precedent, so the SGLA will have a lot of work to do in its wish to stop further states from joining the trend.

Are Sweepstakes Casinos Safe?

Despite all the controversy, sweepstakes casinos are still widely regarded as a safer option for players, especially when compared to traditional online casinos.

What makes sweepstakes casinos unique is that players aren’t allowed to bet real money and use either Gold Coins or Sweeps Coins instead, both of which are virtual.

Gold Coins let players gain access to hundreds of games and play for free, while Sweeps Coins have actual on-site value and can be used to redeem prizes.

From a player perspective, these sites are great if you’re looking to quit traditional gambling or simply don’t want to bet actual money.

They’ve also proven to be highly popular with new-generation casino players who just want to play for fun and experience the gameplay rather than gamble. 

It’s Not the End for Sweepstakes Casinos, But the Industry Is in Trouble

It’s been nothing but bad news for sweepstakes casinos for the past twelve months.

The industry is in major trouble, with player counts dropping and projected revenue for the industry also taking a serious hit.

However, sweepstakes casinos are far from over and iGaming’s biggest trend of the past decade still has plenty of life in it, at least for the next few years.

If more state bans continue, then it will only lead to further player losses.

But if the SGLA and sweepstakes casinos as a collective can come to agreements with individual states and potentially even adapt their existing sweepstakes model, there’s nothing to say the sweepstakes market can’t potentially recover.

Failure to do this could lead to a place where sweepstakes casinos are only available in a handful of states, much like online casinos are, although this is something that sweepstakes operators will be desperate to avoid happening.