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Are sweepstakes casino ban laws necessary to force compliance with states’ gambling laws?

Legal Writer

Publish Date: Apr 30, 2026

Fact checked by: Matt Moreno

Key Points

More states are close to passing laws creating civil and/or criminal penalties for the operation, promotion, and/or service of sweepstakes casinos.
Sweepstakes casino operators have an inconsistent history of complying with cease-and-desist demands from state gaming regulators and law enforcement.
Formal bans can be a double-edged sword if not worded carefully and maintained.

Louisiana and Tennessee could soon become the 10th and 11th U.S. states with some form of law restricting activities related to online casino-style games that use a dual-currency sweepstakes model to award prizes. Similar legislation is still under consideration in Minnesota, and many other states have looked at bills toward that end in 2026.

In other states, gambling regulators and law enforcement have felt confident enough in existing case law and statutes to demand the cessation of sweepstakes casinos offering gameplay coin package sales and awarding prizes to people within their borders. In many of these cases, the recipients of these demands have complied in some fashion.

That level of compliance has brought forth the question of whether statutory language explicitly defining online sweepstakes casinos as gambling and banning activity related to such games is necessary in the states that haven’t passed such laws yet. Aspects of the situation strengthen the case for and against the concept.

Chumba Casino’s restrictions as a case study

Chumba Casino is one of the most popular sweepstakes casinos in jurisdictions across the United States. The Chumba Casino’s conditions and terms dictate where in the nation players may try to secure Sweeps Coins to redeem for prizes.

As of the April 7, 2026, update, the states in which Chumba blocks people from participating in the prize structure are:

California
Connecticut
Delaware
Idaho
Louisiana
Michigan
Mississippi
Montana
Nevada
New Jersey
New York
Tennessee
Washington
West Virginia

While several of these states offer legal real money online casino play, that is not the case in all of them. Furthermore, not all of the states that do so are on this list, as it excludes Maine, Pennsylvania, and Rhode Island.

Cease-and-desist demands from gambling regulators and law enforcement representing a state have not proven a uniform deterrent, either. Illinois is absent from this list despite the Illinois Gaming Board’s cessation demand in February, as just one example.

Statutory barriers aren’t instant disqualifiers for a state in this context, either.

New state laws haven’t been instant game changers

Laws explicitly banning sweepstakes casino play have shown some effectiveness but aren’t a guarantee of absolute compliance. There are no such statutes currently in Louisiana, Mississippi, Nevada, Tennessee, or West Virginia (although Louisiana and Tennessee are close to enacting such legislation at the time of this writing).

Indiana and Maine passed laws banning sweepstakes casino operations earlier this year. Regardless, the April 7 Chumba conditions and terms make no mention of Indiana or Maine whatsoever.

So Chumba has to this point restricted states without explicit sweepstakes casino bans and left states with such laws off its list. While Chumba is just one sweepstakes casino, its policies likely reflect its confidence in its legal stance in a state, or at least a belief that any enforcement actions would not prove effective.

Perception is the mitigating factor for sweepstakes casino cessation

For sweepstakes casinos, the choice of whether to offer their games in a jurisdiction likely comes down to whether company officials believe that doing so will not result in significant harm to the enterprise. It’s a risk, but a calculated one.

With states like Indiana and Maine, it may simply take the various operators time to process new statutory requirements and analyze their products to see if there are any opportunities to continue to do business with alterations. For example, some sweepstakes casinos have opted to only stop offering sweeps coin bonuses to people in some states to avoid running afoul of laws banning dual-currency games.

That’s the case for Chumba in Mississippi and New Jersey. People there can still play games with gold coins but there are no sweepstakes prizes available on the website for people accessing the games within the borders of those states.

As these casinos assess their options, the pertinent factors are whether the casinos believe they have time to consider options and the exact verbiage of any relevant statutes. That’s where bans on sweepstakes casino games may actually backfire for state governments.

Initiating the cat-and-mouse game

Unintended consequences are an inevitable part of law. In the context of bans on sweepstakes casino games, one unintended consequence is that language stating exactly what comprises illegal activity inherently authorizes anything that doesn’t fit within those parameters.

As mentioned, the examination of new statutes affecting sweepstakes casinos may endorse an approach of looking for ways to comply with the statute and still do business within the state even if the legislative intent was to force sweepstakes casino operators to exit altogether. Laws basing the legality of games on the dual-currency system are a perfect example of this phenomenon.

A dual-currency system is a commonly used method for fitting within sweepstakes laws and still offering casino-style gameplay online. Players buy a gold coin package and receive a sweeps coin bonus in this system.

Gold coins have no value outside of enabling gameplay on the specific site. Sweeps coins may be redeemed for prizes following the satisfaction of playthrough requirements.

To ensure compliance, sweepstakes casinos that use such systems maintain a form of entry that does not require any purchase, such as daily logins to the site or a mail entry system. If a state bans dual-currency systems, the potential adjustment is to turn off the sweeps coin option.

Some states like New York have tried to get around the possibilities of “loopholes” by leaving the exact parameters of potential violations of bans to regulators, who are more able to easily adjust their rules than legislators can repeal and replace state laws. However, there is a downside to that situation as well.

Regulations do not carry the force of law in court and are easier to challenge, as the rules are meant to implement statutory requirements, not define them. The subjectivity of the application is the weakness.

State governments that take an explicit ban approach are still counting on sweepstakes casinos’ compliance with the statutes, as none of them have yet to actually inflict civil or criminal penalties upon a sweepstakes casino operator. In that way, they are much the same as state governments that haven’t taken up the issue or where bills toward that end have failed.

At the same time, the odds of that happening increase when there is clear language classifying such gaming opportunities as outside the parameters of legal gambling in a state.

Giving the cat teeth

While enacting sweepstakes casino bans potentially creates loopholes that some operators might try to exploit, that’s the nature of all legal standards. Additionally, prosecutors can only enforce existing laws.

Furthermore, the lack of clear standards for sweepstakes casinos doesn’t mean that certain game providers aren’t exploiting loopholes in existing gambling laws. In fact, that’s been the argument that a lot of proponents of sweepstakes casino bans have made.

For example, an April 2025 memo to colleagues from Pennsylvania Rep. Joe McAndrew regarding his proposal to outlaw sweepstakes casino games stated that “so called sweepstake 'social casinos' are unregulated internet gaming sites and apps exploiting sweepstakes loopholes to get around gaming regulation in Pennsylvania.” As already mentioned, Pennsylvania has no sweepstakes casino ban in place.

To address the conundrum, trade associations for sweepstakes casino operators have suggested that state governments regulate their games instead of banning them. Multiple parties testified in support of such a system in Minnesota during a recent Senate hearing on a proposed ban there.

To date, though, those pleas have fallen on deaf ears across the country. The dominant view has been that sweepstakes casinos operate outside of the scope of legal gambling.

While bans on sweepstakes casinos can be a tool to restrict their operation, they are not a silver bullet in that endeavor, either. They may not be necessary to affect change, but they can provide more feasible paths to enforcement.

What seems to make a difference is the perception that existing statutes pose a legitimate compliance issue for sweepstakes operators. That indefinable quality is by its very nature difficult to define, making it a challenge to encapsulate in the form of laws.

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