New York Bans Sweepstakes Casinos and 3 More States Could Follow

Prediction markets are not the only alternative form of gambling that have come under fire in recent weeks in the US. Last week, New York issued an outright ban on sweepstakes casinos, joining Nevada, Connecticut, New Jersey, and California – whose ban on sweepstakes casinos was highly publicized. New York, however, seems to have set off a chain reaction, with Maine and Indiana filing bills to ban these “freemium” online casinos. And now, Florida may try again to ban the controversial iGaming platforms, having failed to do so back in May.

The sweepstakes industry has flourished in the US, which is where the greatest demand for these platforms has been created. But these last few months have rattled the sector, with prominent states closing down the operations and jeopardizing sweepstakes in the US as a whole. Though the situation is nowhere near as simple as prediction markets in the US.

Now there are 40 states with legalized sports betting, but there are only 7 states with legal real money online casinos. Taking out sweepstakes cuts off a massive demographic of gamers, and with few to no alternatives outside real money casino games and sweepstakes, it may drive more traffic to unlicensed gambling sites.

New York’s Ban on Sweepstakes As It Happened

Senate Bill 5935 was signed into law by Governor Kathy Hochul on December 2025, outlawing online sweepstakes casinos in New York. Many sweeps operators had already withdrawn from New York in the months preceding the bill, with the Attorney General sending out cease and desist letters to over 20 operators.

Any parties found guilty of offering these sweepstakes products will be fined anywhere from $10,000 up to $100,000 and will also lose their gambling license – or lose their eligibility to get one in the future.

The online casinos in question are sweepstakes gaming sites, which offer casino style games but without real money stakes. Instead, they use dual currency models, with a fun currency and a sweeps currency.

What are Sweepstakes Casinos

You play the games using the fun currency, and can earn the sweeps through contests, tournaments, or giveaways. These sweeps currencies are then often redeemable for cash prizes or gifts with real monetary value. Thus, the sweepstakes casinos can potentially offer real money prizes, but don’t actually need gamers to spend money to play the games. But, and perhaps most important to their success, they are not legally bracketed as online casinos.

The sweepstakes casinos operated through a legal loophole, providing slots, table games like blackjack or roulette, and a myriad of instant win titles to gamers. Gamers in states where online casinos are not legalized. And as only 7 states have legalized online casino games, the sweeps rose by unlocking the potential of numerous big, untapped markets.

Maine and Indiana Step Up Sweeps Bill

Lawmakers across the US have criticized the products to varying degrees, but in New York, they have decided to join the list of states that have outlawed these brands. And already we have two more states that are proceeding with bills that will ban sweepstakes casinos. In Maine, LD 2007 was introduced to amend gambling laws and target sweepstakes gaming. Like New York, they want to impose heavy fines and bar all operators from future iGaming licenses. The bill will define Maine’s gambling laws clearly, drawing the line and leaving sweepstakes operators outside what is legally acceptable.

Indiana wants to do the same through House Bill 1052. The law is set to introduce fines of up to $100,000 for operators and service providers. The House Bill will ban sweeps from offering slots, table games, video poker, lottery products, bingo, and even sports betting. Because the sweepstakes casinos don’t just stop at gaming products. Many have also introduced sweepstakes-style sports betting, where you can use the fun and sweeps currencies to place parlays, pregame bets, live wagers, and more.

Florida Attempting a Second Sweepstakes Bill

Florida is the third state that is exploring the notion of outlawing sweepstakes casinos. A bill was introduced back in May, but it was dropped as Florida lawmakers moved onto budgetary and funding bills. Now, Senator Corey Simon has reignited the interest and introduced Senate Bill 1404 to ban sweepstakes sites and the supplementary HB 1467 to revise legislation relating to fantasy sports contests, and other gambling products.

Online gambling in Florida is currently the monopoly of the Seminole Tribe, and these laws would effectively protect its position in the market. The sweepstakes casinos directly compete with the legal gambling channels, and now lawmakers are seeking to end their competition.

States That Have Banned Sweepstakes Casinos

This year has really come down hard on sweepstakes casinos, with 5+ states already closing their doors to the alternative casino gaming platforms, and more states potentially joining them in 2026.

• California: anti-sweepstakes legislation signed in 2025, effective January 1, 2026
• New Jersey: ban signed into law in August 2025
• Connecticut: sweepstakes gaming outlawed in 2025
• Montana: full ban in effect from October 2025
• Nevada: only permits free-play social casinos, prohibiting dual-currency models
• New York: now banned as of December 2025

Idaho, Michigan, Washington and others have enforcement actions or legal interpretations restricting sweepstakes play, and thus many sweepstakes operators completely avoid these states. But the California sweepstakes ban was one of the biggest catalysts in the legal plight against sweepstakes casinos.

A tremendous market that has neither legal online casinos nor sportsbooks, California was a massive hub for sweepstakes operators before October. Its influential decision to ban sweepstakes casinos also brought some game vendors into question, and led to a world renowned provider, Pragmatic Play to exit the US. With its exit, countless sweepstakes casinos lost A-category games, impacting their games portfolio and resulting in many players losing interest.

What Alternatives Players Have

As sweepstakes casinos were not defined as legal online casinos, these platforms could serve players in significant markets where online casinos were not legal. That was one of their greatest appeals, as these players didn’t have alternative, legally registered online casinos to turn to. But as the tide turns against sweepstakes casinos, players will have to look for alternatives. The problem is, that there aren’t many that will supply slots or table game classics like blackjack or roulette.

Fantasy sports apps, peer to peer betting platforms, and prediction markets do not offer casino games, but instead alternative betting products. Going through legally approved channels, you either have to find a local tribal casino or landbased US casino, either in your state or closeby, or you only play online casino games when in one of the legal mobile casino gaming states:

• Connecticut
• Michigan
• Delaware
• New Jersey
• Pennsylvania
• Rhode Island
• West Virginia

Outside these options, if you want online casino games but in one of the 40+ states where it has not yet been legalized, your last option is turning to unregulated online casinos. That is, sites that do not have the local permissions to operate in your state (if there is no online gaming bill – they can’t anyway).

But not all unregulated sites are trustworthy, and the key difference is whether or not a gambling site has licensure abroad or not. Because there are offshore gambling authorities that can license online casinos to cater to players practically everywhere. They may not have the local or regional permissions to operate in the US, but these sites do have:

• Provably fair to play RNG games
• Top quality security encryption and software
• A duty of care to protect your interests as a player
• A regulator that you can complain to if you have a dispute with the operator
• Licensure to ensure that they are legitimate online casinos

They are not, strictly speaking, black market sites as these are regulated platforms – only not recognized in the US. These licensed iGaming platforms make up the US’ gray market, operating without the local permissions but holding respected licenses, ensuring that they provide fair and reliable gambling environments.

Which States May Legalize Online Casinos Soon

In recent years, more states have shown interest in opening legal channels for sports betting. Since PASPA was repealed in 2018, and sports betting was legalized at the federal level, 39 states have legalized sports betting. In December, Missouri launched its legal sports betting, becoming the 39th state to pass a sports betting bill. Online casino gaming, on the other hand, is a lot less widespread.

Rhode Island legalized online casinos in 2023, becoming the 7th state with legal online casino gaming. But since then, progress has been slow and no other states have achieved any breakthroughs. Massachusetts is perhaps the closest right now, with House Bill 4431 that would legalize online poker, slots, table games and live dealer games, but it needs to be approved by the lawmakers. New York and Illinois could also potentially explore similar laws. Then, there are states like Maine, where bills have been proposed, but they were paused by the authorities.

Though with more states pushing bans on sweepstakes casinos – and not many alternatives for gamers – further emphasis on online casino bills could be a significant topic in 2026. The sweepstakes debate may just become the catalyst the USA needs to wrestle the spotlight from online sports betting to online casino gaming.