How New Restrictions in the US Are Crushing Sweepstakes Casinos

Just a year ago, sweepstakes casinos remained a stable "gray zone" in iGaming. But in 2026, the dual-currency model began to collapse rapidly under a wave of bans and tightening regulation.

We break down what is happening to sweepstakes casinos in the US and how the wave of strict bans is dismantling operators' businesses.

How the sweepstakes brand market is collapsing

In 2026, the sweepstakes segment came under a wave of regulatory restrictions in several states — including California, New York, Indiana, Maine, Louisiana, and Tennessee — effectively banning the dual-currency model of social casinos. 

On February 5, 2026, the Illinois Gaming Board, together with the state attorney general's office, issued cease-and-desist letters to 65 sweepstakes casino operators simultaneously, including brands such as VGW (Chumba Casino, LuckyLand Slots, Global Poker), High 5 Casino, Fliff, Modo, Pulsz, and Stake.us. The commission stated that these platforms were operating as illegal online gambling businesses in direct violation of the state's criminal code. 

As of early April, only two of the 65 operators — JefeBet and Jumbo88 — had actually updated their geo-blocking for Illinois residents. Stake.us switched Illinois accounts to withdrawal-only mode, while the remaining platforms continued operating without changes — despite the threat of civil or criminal liability for non-compliance.

In Indiana, direct fines were introduced for organizing such games, while Maine officially signed into law a bill that explicitly bans dual-currency models combined with slot simulations and imposes strict sanctions ranging from $10,000 to $100,000 in fines for operators.

Additionally, Oklahoma — where the legislature overrode the governor's veto and introduced Class C2 felony criminal liability for launching such online games — expanded the authority of local gaming commissions to block unlicensed internet gambling. In Mississippi and Maryland, regulators are considering expanding criminal statutes to fully eliminate unregulated sweep platforms.

The primary driver behind these bans and legal proceedings is the American Gaming Association, which represents the interests of licensed operators (FanDuel, DraftKings, BetMGM) and accuses sweepstakes casinos of tax evasion and a lack of player protections.

While some states are still passing legislation, a number of operators have already exited the market. Since October 2025, at least six sweepstakes operators have shut down entirely — LuckyStars, OnPoint Casino, and Turbo Stakes Casino announced their closure on November 16, joining three platforms that had already shut down earlier.

On June 2, two larger platforms, Mega Bonanza and Jackpota, disabled Gold Coin and Sweeps Coin gameplay for users in Indiana and Maine, where new state-level bans had just come into effect.

Why the model was a "gray zone"

The popularity of social casinos was built on a model that allowed them to circumvent restrictions. Unlike traditional casinos, these platforms use two currencies — Gold Coins and Sweeps Coins. The first can only be purchased for gameplay with no option to cash out, while the second is obtained for free through bonuses or promotions. It is the second currency that can be exchanged for real money or prizes. 

Operators insisted this did not constitute gambling, since participation formally remained free of charge. Under US law, gambling is defined by three elements: a prize, an element of chance, and consideration (payment to participate). Sweepstakes casinos attempted to eliminate the consideration element through a free alternative method of entry — for example, mailing a physical letter to receive coins. 

However, in 2026, courts and regulators ruled that the distinction was purely technical. Purchasing in-game Gold Coins is now treated as a disguised form of consideration, since players buy them specifically to access the limited Sweeps Coins used for real-money gameplay. The new laws strike directly at the dual-format model. 

Who else is in the crosshairs beyond the casinos themselves

The new restrictions have affected not only the casinos but the entire ecosystem of businesses that build infrastructure for them. New York State was the first to penalize any third-party services for cooperating with sweepstakes platforms, and in 2026 Virginia and Minnesota adopted the same approach.

As a result, partners that keep these sites running now face the threat of heavy fines. Payment processors such as Stripe and PayPal, for instance, risk being held liable as "third-party services" supporting prohibited activity if they continue processing payments for sweep casinos. 

At the same time, geo-compliance providers such as GeoComply are being required to deliver more precise blocking of users from restricted states — or risk being classified as "third-party services" themselves and facing liability accordingly.

The affiliate segment is also coming under regulatory pressure. Promoting sweep products in banned regions is now being treated on par with advertising illegal gambling. Faced with the threat of severe financial penalties, teams are having to carefully weigh all risks before launching such campaigns. 

Financial scale

The tightening of regulation is unfolding against the backdrop of rapid market growth. According to analyst estimates, in 2026 the US social and sweepstakes casino segment reached approximately $7.2 billion in annual user spending, up from roughly $4.8 billion in 2023.

The sheer scale of the market has been one of the key factors driving heightened scrutiny from regulators and licensed operators alike. Market losses from restrictions in the states mentioned above are projected at between $2.1 and $2.5 billion in annual revenue. It is expected that a portion of these flows will shift to the licensed iGaming segment in the form of tax revenue, while the rest will simply disappear as brands shut down or exit specific jurisdictions. 

It is too early to speak of sweepstakes casinos disappearing entirely. Some states are opting for an outright ban on the model, while others are prepared to allow the business to continue — but only under the condition that operators obtain licenses and pay taxes. 

The geography of bans will continue to expand, as similar restrictions are currently under consideration in eight additional states. Operators will have to either adapt their products to the new requirements or exit the US market.

Conclusion

Sweepstakes casinos have long been one of the fastest-growing segments of iGaming in the US, but in 2026 regulators began systematically cutting off the legal loopholes on which that growth was built. 

For affiliates, payment services, and other market participants, this is a signal to assess risks more carefully and proactively seek alternatives to offers that may soon find themselves under restrictions.