1. Reflection
Fifteen years running ICE gave me a good instinct for the moment a grey market stops being a curiosity and turns into an industry, and sweepstakes casinos crossed that line in the United States without most of the mainstream gambling world quite clocking it. Chumba, Stake.us, High 5 Casino, and the rest built a model in which a player buys virtual gold coins for entertainment and receives a free top-up of sweepstakes coins that, under most states’ sweepstakes laws, can be redeemed for cash prizes. As a result, the games look and play exactly like a real-money slot or blackjack table, without anyone in the operation holding a gambling licence.
By 2024, that had become a ten-billion-dollar-a-year business across the country, according to the American Gaming Association’s own research published in July 2025. In New York alone, it generated 762 million dollars in sales before the state shut the door on it.
I do not think everyone running these platforms set out to build a shadow gambling industry, but I do think plenty of them understood exactly how far the sweepstakes exemption could be stretched and stretched it as far as it would go. And I have had almost the same conversation with regulators about this as I did twenty years ago about offshore poker sites when we were building ICEi. Remember ICEi?
2. Global Connection
The comparison that keeps surfacing when I talk to operators and compliance leads is the early online gambling era in the United States. There, offshore poker and casino sites served American players for years before the 2006 Unlawful Internet Gambling Enforcement Act forced payment processors to cut them off.
By the time Washington acted, the industry had grown so large that unwinding it caused real damage to ordinary players with money sitting in overseas accounts. The UK went through its own version of the same pattern before the Gambling Act 2005 brought the whole sector onshore into a single licensing regime. So a market that had been operating in a patchwork of exemptions and grey areas suddenly had one set of rules everyone had to meet.
Japan has lived with a variant of this for decades in pachinko, where parlours pay out prizes rather than cash because cash payouts would make them a casino. Players then sell those prizes for money at a separate exchange booth that is not legally connected to the parlour. That is the same dual currency trick sweepstakes operators are running, just with steel balls instead of gold coins. What is different this time is the pace. Five states, New York, California, Connecticut, Montana and New Jersey, passed outright bans in 2025 alone. Louisiana’s legislature passed one that the governor vetoed only for the state’s attorney general to declare the operators illegal anyway in July 2025. And Michigan has now sent multiple rounds of cease-and-desist letters through the course of the year, one batch as recently as November 2025.
3. The Case for Moving Now
My advice to licensed operators and their boards is to stop treating sweepstakes casinos as a curiosity that regulators will eventually tidy up on their own. The AGA’s own research from July 2025 found that 90 per cent of sweepstakes casino players already know they are gambling, and 68 per cent cite winning real money as their main reason for playing. In early 2025, half of all online real-money casino advertising was for offshore sweepstakes brands. So the competitive damage to regulated operators is not theoretical; it is showing up in ad spend and player acquisition right now.
Boards should be pushing their government affairs teams to back regulation over blanket prohibition, because prohibition without enforcement capacity just pushes the same players toward operators with even less oversight. The trade body representing several sweepstakes operators has already publicly said that it wants to be regulated and to pay tax. That is a rare moment where the regulated industry and at least part of the grey market actually want the same outcome.
Boards also need to look at the legal exposure within VGW, the largest sweepstakes operator, which settled one case in Kentucky for $11.75 million in 2023 and faces active litigation in New York, Alabama, and elsewhere. That pattern of litigation is the same one that eventually forced clarity onto early online poker. And any operator still betting that the sweepstakes model survives intact into 2027 is misreading the last two years of state action.
The operators who come out ahead will be the ones who build a genuine, licensed real-money product now, while the market is still working out its rules. Or they will be the ones who make the loudest and earliest case to their state regulators for a proper licensing framework, rather than waiting for a ban that arrives after the damage to consumer trust and tax revenue is already done.
4. Boardroom Questions
1. How much of our player acquisition cost and marketing spend is effectively being driven up by sweepstakes brands operating without a licence in our states, and can we quantify it?
2. If our state moves to licence and tax sweepstakes operators rather than ban them, would we support that publicly, even though it creates new competitors we cannot currently outcompete on cost?
3. What does our current lobbying position on sweepstakes enforcement say to our regulator about how seriously we take protecting the channel we are licensed and taxed to operate in?
Sources
1. American Gaming Association, AGA Research Reveals Consumers Know Sweepstakes Casinos Are Gambling, 31 July 2025, https://www.americangaming.org/aga-research-reveals-consumers-know-sweepstakes-casinos-are-gambling/
2. iGaming Business, How 2025 became the year US states turned against sweepstakes casinos, 16 December 2025, https://igamingbusiness.com/legal-compliance/2025-sweepstakes-casinos-year-in-review/
3. CDC Gaming, Despite governor’s veto, Louisiana AG declares sweepstakes casinos illegal, 9 July 2025, https://cdcgaming.com/brief/despite-governors-veto-louisiana-ag-declares-sweepstakes-casinos-illegal/
4. CasinoBeats, VGW Wins Third Georgia Lawsuit as Legal Challenges Mount Nationwide, 25 July 2025, https://casinobeats.com/2025/07/25/vgw-third-georgia-lawsuit-dismissed/
5. Michigan Gaming Control Board, Gaming Control Board Issues Cease-and-Desist Letters to Three Online Casinos Operating Illegally in Michigan, 12 November 2025, https://www.michigan.gov/mgcb/news/2025/11/12/cease-and-desist-letters-issued-to-three-online-casinos