KEY TAKEAWAYS
Whether a sweepstakes casino is legal depends on the state, and as of October 2026 several states have enacted laws that expressly prohibit the dual-currency model these platforms use. A sweepstakes casino offers casino-style games played with virtual coins, and some of those coins can be redeemed for cash or prizes. Operators say the model is a lawful promotion because it offers a free way to enter. Regulators in several states disagree, and have either applied existing gambling law or passed new statutes. California approved Assembly Bill 831 on October 11, 2025, New Jersey enacted Public Law 2025, chapter 128 on August 15, 2025, New York’s governor signed Senate Bill 5935-A on December 5, 2025, and Maine enacted Public Law 2025, chapter 645. This article explains the legal theory behind the sweepstakes model, what those four statutes say, how the operators’ and regulators’ positions differ, and what remains disputed. It describes the law in general terms and does not say whether any particular platform is lawful in any particular place.
The Legal Theory Behind Sweepstakes Casinos
American gambling law has traditionally identified an unlawful lottery by three elements: a prize, chance, and consideration, meaning something of value paid for the chance to win. The Social Gaming Leadership Alliance, an industry group for social-game operators, describes its members’ model in these terms. It says a sweepstakes promotion is lawful when one of the three elements is removed, and that its partners remove consideration by allowing free participation. This is the prize, chance and consideration framework that underlies the entire debate, although definitions differ from state to state and each state’s own statutes and constitution control.
A typical sweepstakes casino uses two kinds of virtual currency. One kind is purchased and used for play, and the other is provided as a bonus with purchases or through a free method of entry and can be redeemed for cash or prizes. The statutes reviewed for this article call this a dual-currency system of payment and define it in different ways. Maine’s statute, for example, describes a system that encourages a person to buy coins that are not exchangeable for prizes in order to obtain coins that are.
Regulators approach the question differently. Instead of asking only whether a free entry route exists, they ask whether the overall product operates as a game of chance in which players risk something of value. In a June 2025 announcement, the New York Attorney General’s Office stated: “Under New York law, betting cash-redeemable virtual coins on games of chance constitutes gambling, regardless of how the casino operator characterizes how players can obtain the virtual coins.” That statement captures the substance-over-label argument that regulators make, and it is the direct counterpart to the operators’ framework described above.
What State Laws Say About Sweepstakes Casinos
California and New Jersey
California’s Assembly Bill 831 (Chapter 623, approved October 11, 2025) added Penal Code section 337o, which makes it unlawful for any person or entity to operate, conduct, or offer an online sweepstakes game in the state. It also makes it unlawful for a financial institution, payment processor, geolocation provider, gaming content supplier, platform provider, or media affiliate to knowingly and willfully support such a game. A violation is a misdemeanor punishable by a fine of $1,000 to $25,000, imprisonment in county jail for up to one year, or both. The statute states that it does not restrict games of a gambling enterprise licensed under the Gambling Control Act or the operations of the California State Lottery.
New Jersey took a different drafting route. Public Law 2025, chapter 128, approved August 15, 2025 and effective immediately, provides that offering a sweepstakes in which a person in the state can participate by paying something of value is unlawful gambling under the state constitution unless it meets a list of conditions. Those conditions, all of which must be met, include a free method of entry, no paid entry beyond an ancillary purchase of food, non-alcoholic beverages or merchandise not exceeding $20 (and excluding coins, tokens or online credits that only permit sweepstakes entry or can be exchanged for money or merchandise), and identical odds for paid and free entrants.
New York and Maine
New York’s Senate Bill 5935-A, signed December 5, 2025 as Chapter 605, added section 912 to the Racing, Pari-Mutuel Wagering and Breeding Law. It makes it unlawful to operate, conduct, or promote online sweepstakes games, which it defines as internet-accessible games using a dual-currency system that simulate casino-style gaming. The measure sets fines of $10,000 to $100,000 per violation and gives enforcement authority to the state gaming commission, the state police, and the attorney general’s office.
Maine’s Title 8, chapter 38, enacted as Public Law 2025, chapter 645, makes operating or promoting an online sweepstakes game, or supporting one, a civil violation. Section 1352 sets a fine of not less than $10,000 and not more than $100,000, and it requires the responsible state unit or board to revoke the license of a licensee found in violation.
How Enforcement Works in Practice
Enforcement has not depended only on new statutes. The New York Attorney General’s Office sent cease-and-desist letters to the operators of 26 online platforms that, working with the State Gaming Commission, it identified as offering slots, table games and sports betting using virtual coins that could be exchanged for cash and prizes. On June 6, 2025, the office announced that all 26 platforms were ending the sale of sweepstakes coins in New York, an example of existing law applied before a new statute was passed.
The newer statutes also reach beyond operators. Both the California and New York measures name payment processors, geolocation providers, platform providers and similar businesses, so the reach extends to the supply chain and not only to the games themselves. California’s legislature added an intent statement saying the act is aimed at persons who knowingly and intentionally engage in, promote or facilitate dual-currency sweepstakes games, and not at infrastructure providers that may be used unknowingly.
A short hypothetical shows how definition-based statutes work. Suppose a state’s law defines an online sweepstakes game as any internet game using two currencies that simulates casino games. A platform offering such a game would fall within that definition regardless of its free-entry route, unless the statute contains an exception for it. The example is illustrative only and is not a statement about any real platform.
What Is Still Changing or Disputed
The table summarizes the four statutes reviewed, as of October 2026, based on each legislature’s published text.
| State | Measure | Status | Stated consequence |
|---|---|---|---|
| California | AB 831, Chapter 623 | Approved October 11, 2025 | Misdemeanor; fine of $1,000 to $25,000, up to one year in county jail, or both |
| New Jersey | P.L. 2025, c.128 | Approved August 15, 2025; effective immediately | Civil liability, and possible criminal liability under existing gambling statutes |
| New York | S5935-A, Chapter 605 | Signed December 5, 2025 | Fine of $10,000 to $100,000 per violation; loss of or ineligibility for a gaming license |
| Maine | P.L. 2025, c.645 (Title 8, ch. 38) | Enacted; statute current through October 1, 2026 | Civil violation; fine of $10,000 to $100,000; license revocation |
The table is not a complete list of states. Other states have also acted, and tallies change often, so each state’s own statute is the reliable reference for the status in that state.
The central disagreement is unresolved in the sources reviewed. In a July 3, 2025 response to a Louisiana Attorney General opinion, the Social Gaming Leadership Alliance said its partners’ games provide free methods of entry and said: “This is not gambling” and that the models are lawful sweepstakes promotions. Attorneys general and legislatures in the states above treat the dual-currency model as gambling. This article does not resolve that disagreement, and new statutes and enforcement actions continue to appear.
Common Misconceptions About Sweepstakes Casinos
Misconception: a free entry route settles the question. New Jersey’s statute treats a free method of entry as one of several required conditions, and the New York Attorney General’s Office has said the operator’s own characterization does not control. Operators disagree, so the point is contested rather than settled by the free route alone.
Misconception: a sweepstakes casino is the same as a licensed casino. Licensed online gambling is authorized by state regulators. In its June 2025 announcement, the New York Attorney General’s Office said sweepstakes casinos are not subject to audits and other regulatory oversight by the state.
Misconception: one state’s rule applies everywhere. Each statute reviewed here is a state law and applies in its own state, so a prohibition in one state does not by itself decide the question in another.
Where to Find the Official Rules
Readers who want to know the position in a particular state can consult the state legislature’s website for statute text, which is the primary source for what a law says and when it took effect. Each state’s gaming regulator and attorney general publish guidance and announce enforcement actions, and those pages often show how an agency reads its state’s law.
Because the statutes reviewed here differ in definitions, exceptions and penalties, a general summary cannot substitute for the text of the law that applies in a given place. Anyone with a question about their own situation should consult a licensed attorney in their state, and should treat dated, official sources as the starting point for any research, since these laws have been changing quickly.
Related Laws and Next Reading
For the states that license and regulate online casino games, see which states have legal online casinos in the USGamingLaw overview of licensed iGaming. New York’s wider framework, including its constitutional approach to gambling, is covered in the explainer on whether gambling is legal in New York.
Two related topics help readers continue. Federal rules aimed at payments for unlawful internet gambling are explained in the article on the Unlawful Internet Gambling Enforcement Act, and the general method for verifying a license on a regulator’s site appears in the guide to checking whether an online sportsbook is licensed.
Frequently Asked Questions
Legal disclaimer: This article is for general informational purposes only and is not legal advice. Gambling laws vary by jurisdiction and change frequently; the information above reflects our research as of October 2026. For advice about your own situation, consult a licensed attorney in your state and check the official sources of your state’s gaming regulator.
Sources & References
- California Legislative Information — AB 831 (2025–2026), Chapter 623
- New Jersey Legislature — P.L. 2025, c.128 (A5447 1R)
- New York State Senate — Bill S5935A (2025–2026)
- Maine Legislature — Title 8, Chapter 38: Online Sweepstakes Games Prohibited
- New York Attorney General — Attorney General James Stops Illegal Online Sweepstakes Casinos (June 6, 2025)
- Social Gaming Leadership Alliance (industry group) — Online Social Games
- Social Gaming Leadership Alliance (industry group) — Response to Louisiana Attorney General Opinion (July 3, 2025)
