Sweepstakes casinos, a unique form of online gaming, have seen explosive growth in recent years. These platforms, which operate under a model different from traditional gambling, are gaining popularity in the US, with their revenue reaching a staggering $4 billion (€3.7 billion) in 2023. This marks a 36 percent increase from the previous year. Participation has also surged, with more than one million Americans engaging with sweepstakes casinos each month. In total, player spending in 2023 hit nearly $6 billion (€5.56 billion), and projections suggest these numbers could double in the coming year.
This boom in the sweepstakes sector is part of a broader trend in the US gaming industry. In 2024, the total revenue from commercial gaming reached a record $71.92 billion (€66.7 billion), with online casinos playing a significant role in this surge. The iGaming market, which includes online casino games and sports betting, saw a 24.6 percent growth, contributing $21.54 billion (€20.2 billion) to the overall total.
However, this rapid growth brings with it a number of concerns, particularly regarding problem gambling. Estimates from the National Council on Problem Gambling suggest that around 2.5 million US adults face severe gambling issues, with an additional 5 to 8 million individuals experiencing significant gambling problems. These figures predate the rise of online sweepstakes casinos, implying that these platforms may be exacerbating the problem.
States lead call for ban
The American Gaming Association has raised concerns about the legality and regulation of sweepstakes casinos. These platforms operate under federal sweepstakes laws, but the legality of their operations varies from state to state, creating a complex and inconsistent regulatory environment. In some states, sweepstakes casinos have been banned outright, with Michigan and Washington among those that have made them illegal.
Other states are pushing for stricter regulations. In New York, for instance, a bill (SB5935) has passed through the Senate committee, aiming to ban online sweepstakes casino games. Should this bill be enacted, violators could face fines ranging from $10,000 to $100,000 (€9,300 to €93,000). Similarly, Mississippi, Maryland, and West Virginia are either considering or have already passed laws targeting sweepstakes casinos. In Idaho, while sweepstakes casinos aren’t banned, cash prizes from such platforms are prohibited.
As regulatory pressures increase, several major platforms are pulling out of certain states. High 5 Casino, one of the leading sweepstakes-based online gaming platforms, announced it will cease operations in New York by April 2025.
This move follows a broader trend, with platforms like PlayFame, SpinBlitz, and Hello Millions scaling back or exiting several jurisdictions due to tightening regulations. High 5 Casino has also halted new account registrations in New York as of 27 March 2025, urging users to redeem any remaining virtual currencies and withdraw their winnings before 10 April 2025. Despite these challenges, the platform assured customers that all account balances would be honoured, and customer support would remain available during the transition.
This raises an important question: Is banning sweepstakes the only solution?
Experts break down the impact
To delve deeper into the issue, we spoke with Matt Carey from Vixio Gambling Compliance, who provided insights into the growing debate surrounding sweepstakes casinos and their regulation.
SiGMA: The calls to ban Sweepstakes casinos are gaining momentum in states like New York and Arkansas. What’s your view on this issue, and how might it affect industry revenues?
Matt Carey, reporter from Vixio Gambling Compliance answered: “It’s difficult to assess the full impact, as sweepstakes revenue isn’t widely reported. However, Michigan provides a useful example of how restrictions have impacted the legal iGaming industry. Since the gaming control board started cracking down on sweepstakes, Michigan has seen slight year-on-year growth. This suggests that while some impact is inevitable, it’s not necessarily catastrophic for the industry.”
SiGMA: Regulatory-wise, it’s often claimed that online casinos are safer than sweepstakes casinos. Is this really the case, or just an exaggeration?
Carey: “Regulated online casinos must comply with state-mandated safeguards, such as game testing, age verification, and know-your-customer (KYC) requirements. While reputable sweepstakes operators may adopt similar measures, they’re not legally required to. Opinions differ on which is ‘safer’. Regulated operators argue that online casinos are safer due to state-imposed regulations, while some sweepstakes operators insist they implement similar safety controls as part of good business practice.”
SiGMA: Problem gambling is a significant factor behind calls for banning sweepstakes. But is banning truly the solution?
Carey: “Banning one form of gaming often leads players to seek alternatives, whether regulated or offshore, particularly those with gambling problems. In states where sweepstakes are legal but online casinos are not, it’s unclear whether players would turn to regulated options or seek out unregulated markets. A significant issue is that sweepstakes casinos aren’t included in state self-exclusion lists, meaning players can self-exclude from regulated platforms but still return to sweepstakes sites. Banning sweepstakes might reduce some problems, but it’s uncertain whether it would fully address the underlying issues, or whether operators would simply adapt and find ways to circumvent the new regulations.”
Ban: a viable solution?
The rise of sweepstakes casinos has undeniably changed the landscape of online gaming in the US. While their growth presents opportunities, particularly in terms of revenue generation, it also raises serious concerns. But banning still doesn’t add up to be a viable situation.
As more states consider regulating or banning sweepstakes casinos, the industry must find a balance between fostering innovation and protecting vulnerable individuals from the risks of problem gambling. Whether banning sweepstakes is the solution remains a matter of debate. However, with growing concerns over consumer safety and fairness, it is clear that regulatory clarity and stronger consumer protection measures will be key in determining the future of sweepstakes casinos in the US.
