For many Americans, the level of access to regulated online gambling environments has transformed completely in recent years. Despite the country’s long-standing history of strict iGaming laws, the past decade has seen digital gambling formats take off, driven by an effective combination of rising consumer demand, progressive regulatory upheaval and the development of essential digital infrastructure. Yet, while mobile sports betting has experienced rapid adoption nationwide, jurisdictions have been far slower to bring online casinos into the regulated space. As a result, sweepstakes casinos have emerged as a popular alternative, providing players with an entertaining gaming option that has filled this lucrative gap in the market.
The outcome of California’s recent bill on sweepstakes, however, has highlighted the growing uncertainty over their long-term place in the modern scene, with the West Coast state one of several now looking to restrict these platforms.
The contentious structure of sweepstakes casinos
In regions where real-money casinos are prohibited, many operators have instead adopted sweepstakes models to evade iGaming restrictions. Structured in a similar way to other popular sweepstakes contests and giveaways, no deposit of funds is required to play casino games and win prizes. This means that sweepstakes casinos are governed not by gambling laws but rather by regulations that oversee promotional contests.
In practice, these platforms swap out real money wagering for two virtual currencies. The first, often called Gold Coins, has no cash value and is often given for free as part of welcome packages. These coins can be used for casual play, in which cash prizes cannot be redeemed. So-called Sweepstakes Coins are the second currency and are given as a bonus when Gold Coins are purchased. It is these coins that can then be used to wager on certain games, where winnings can be redeemed for cash prizes. This dual-currency system is what separates sweepstakes casinos from standard iGaming platforms.
Despite the differences between the two casino types, state regulators are increasingly viewing sweepstakes as a legal loophole that facilitates online gambling activities in regions where they are prohibited.
Details of California’s new bill
California has been at the forefront of this surge, epitomized by the unanimous result of its recent sweepstakes bill. Brought into the assembly by Democratic member Avelino Valencia, the proposed bill sought to prohibit dual currency sweepstake sites that mimicked real money iGaming platforms.
The bill (AB831) was passed by the assembly, 63-0, reflecting unanimous support amongst California’s lower house as well as the California Nations Indian Gaming Association. Speaking to the assembly, Valencia stated, “We cannot look the other way while these platforms exploit legal grey areas. These operations undermine the voter-approved framework that affirms Tribal governments’ sovereign right to conduct gaming in California. AB831 strengthens that framework and ensures gaming in California remains fair and accountable.” Assessing the overwhelming outcome of the vote, it is clear that Valencia’s fellow members agree.
It has not come without opposition, however. Four tribes have spoken out against the bill, claiming it would further limit the economic viability of their operations in what is already an uncertain financial time. Others have critiqued the rushed nature of the proposed legal changes, stating that lawmakers should instead be focusing on creating regulations that accept the growing appetite for social online gaming in the state, rather than looking to further limit options.
In any case, the next step for the bill is to head to the California State Senate, where a committee will review the details of the proposed changes to the law before sending it over to Governor Gavin Newsom to sign off. Could sweepstakes casinos soon be a thing of the past in the Golden State?
Scrutiny growing nationwide
The shifting regulatory stance on sweepstakes in California is not isolated, instead reflecting greater trends emerging across the U.S., with regulatory crackdowns underway in multiple jurisdictions. Already in 2025, Montana, Connecticut and New Jersey have signed off bills to ban sweepstakes platforms, while significant restrictions have been imposed in New York, Washington and Michigan, where cease-and-desist orders have been handed out to operators.
Though the majority of states have continued to maintain their sweepstakes markets, the rapid nature in which the aforementioned regions have prohibited these platforms is indicative of a changing tide. Much like how the 2018 PASPA repeal catalyzed the launch of regulated sports betting across the country in a matter of years, the shifting stance on sweepstakes could soon pick up momentum. This could have a serious impact on the sweepstakes industry going forward.
Implications for the sweepstakes market
The restrictions in place in New York, New Jersey, and now California present a huge loss for sweepstakes operators. Collectively home to over 69 million people – roughly 20% of the total population – these regions also possess some of the highest value users in the country. The loss of these markets is therefore a huge financial hit that must be absorbed by companies. What’s more, with the potential for more states to impose stricter regulations in the coming years, compliance costs look set to continue rising elsewhere as well. Larger expenditure requirements could cause many smaller operators to shut down. Within a shrinking market like this, looking for a reliable sweeps casino to access high-quality games will become harder.
Players could also see many platforms alter their business model, shifting either to offer real money iGaming or free-to-play social casinos. While this would require a significant overhaul of day-to-day operations to comply with alternative legal restrictions, it could present a viable way for sweepstake operators to continue generating revenue.
The passing of AB831 in California is the latest in a long line of recent challenges to the U.S. sweepstakes industry. It highlights the ongoing debate in the states surrounding sweepstakes casinos and where their place within the country’s laws truly lies. For now, however, the games model remains in a strong position across the majority of state jurisdictions. Many in the industry will be keeping a keen eye on how opinion shifts in the coming months.
