Regulation
The 2025–2026 sweepstakes casino crackdown: which states banned dual-currency play
The short answer
The 'sweepstakes casino' loophole — dual-currency sites that sell play coins bundled with redeemable 'sweepstakes' coins — is being closed state by state. Statutory bans have been enacted in California (AB 831, effective January 1, 2026), New York (S5935A, signed December 5, 2025), and a tracker compiled by Lines.com counts roughly ten states with enacted bans plus more enforcing existing gambling law against the model.
In this article
Sweepstakes casinos operated for years in a gray zone: no purchase required to play, virtual currencies that could nonetheless be redeemed for cash, and state gambling law that arguably never fit the dual-currency design. Starting in 2025, legislatures stopped arguing about whether the model counted as gambling and simply banned it by name.
The statutory wave
California set the template with AB 831, signed October 11, 2025 and effective January 1, 2026: the law prohibits operating, conducting or promoting online sweepstakes games that use the dual-currency simulated-gambling mechanic — and, significantly, extends liability beyond operators to entities that support or promote the games, putting payment processors, platform providers and endorsers on notice. New York followed with S5935A (the Addabbo bill), which passed the Senate 57–2 and was signed December 5, 2025 as Chapter 605, banning online sweepstakes games and revenue derived from illegal markets.
Illustrative example
| Status | States reported |
|---|---|
| Enacted bans | California, Connecticut, Indiana, Louisiana, Maine, Montana, Nevada, New Jersey, New York, Tennessee |
| Pending | Oklahoma (effective November 2026 per tracker) |
| Enforcing existing law | Cease-and-desist actions in additional states, including Colorado |
What the model was — and why it drew fire
The design was deliberate: 'Gold Coins' sold for play, 'Sweeps Coins' awarded free alongside purchases and redeemable for prizes, structured to fit promotional-sweepstakes exemptions rather than gambling law. Critics — state attorneys general, tribal gaming interests, licensed operators — argued the free sweepstakes coin was functionally a bet. The new statutes remove the ambiguity by defining the dual-currency simulated-gambling structure itself as prohibited, which is why the bills were drafted to reach operators, promoters and adjacent service providers rather than debating currency labels.
The crackdown also reshapes the legal map readers use to find where casino-style play is lawful — see how to keep track when source documents change mid-story and commercial vs. tribal gaming revenue: what to compare.
