The Past, Present & Future Of Sweepstakes Casinos
This is an interesting time for the world of sweepstakes casinos. On the one hand a report by the highly respected business analysts KPMG found that the sector was increasing in size by over 60% a year and generates $14.3 billion in annual revenue. On the other, the legality of sweepstakes casinos is currently being questioned by a number of states in which they have operated for years with a number of them already banning them outright.
As anyone who has played in one will know, a sweepstakes casino operates in very much the same way that a real money online casino does. But the difference is that there is no need for any player to spend a single cent playing if they don’t want to.
This works because there are two distinct currencies that can be used to play: gold coins and sweeps coins.
Gold coins can be purchased for play but any winnings gained with them are essentially worthless. Sweeps coins, on the other hand, can be exchanged for either cash or gift cards once a minimum value has been achieved.
Sweeps coins can only be obtained, not bought. This can be done by acquiring them as part of a gold coins package or as rewards in promotions. They are also available if players apply by post. This, as we shall see, is one of the key legal loopholes that sweepstakes casinos use.
The history of the sweepstakes casino
The origins of sweepstakes began many centuries ago – as far back as the time of the Roman Empire when games of chance were offered to the people as a way to improve the public mood.
Fast forward to the late 19th century and these started to be used as marketing techniques by companies looking to boost sales. Often it included the need to include a proof of purchase to enter a prize draw or other competition.
But the changing legal landscape meant that these came under increased scrutiny and it was eventually deemed to be unlawful to demand a purchase to enter a game of chance. It is this principle that today allows sweepstakes casinos to operate.
The catalyst for the arrival of sweepstakes casinos came in 2006. This was when the US government brought in the Unlawful Internet Gambling Enforcement Act (UIGEA). This targeted the payment providers working with online casinos and poker sites.
This effectively shut down the nascent online sector at a a stroke. But, as no payments are involved in sweepstakes casinos many operators saw the opportunity to operate if not entirely lawfully at least within something of a gray area. As a result, today there are countless sites operating across many states. So many, in fact, that players have to turn to sites like Casino Guru to find the top sweepstakes casinos currently operating.
Looking to the future, however, there are strong signs that this is one particular bubble that may be on the verge of bursting.
States get tough
In the last couple of years the way that sweepstakes casinos operate has increasingly come under the microscope from various state legislatures. There is a gathering view that rather than free-to-enter games of luck and chance these more closely resemble online casinos that cost money to play as you have to purchase gold coins. The fact that sweeps coins can also be exchanged for cash or equivalent prizes is further proof, in the eyes of law makers, that these casinos are operating illegally.
In 2025 six separate states took steps to explicitly ban sweepstakes casinos from operating and this year a number of others are seriously looking at ways to restrict their operation if not to ban them altogether.
The six states that have issued an outright ban are California, Connecticut, Montana, Nevada, New Jersey and New York. Washington, while not having any specific legislation banning sweepstakes casinos, does regard many forms of online gambling as felonies and sweepstakes casinos do fall into this category.
The states that are in the process of drawing up or passing legislation include Indiana, Iowa, Maryland, Mississippi, Maine, Oklahoma, Tennessee, Utah and Virginia.
An uncertain future
It’s obvious to see that sweepstakes casinos are on the wrong side of a gathering momentum to deem them illegal.
Whether they have the power singly or collectively to fight back remains to be seen and the operators may be looking at how the legislation passed in 2018 by the Supreme Court to make sports betting legal came about.
A wider issue may be that states may now also be inclined to review their attitudes to real money online casinos. There is a possibility that it could lead to greater liberalisation around these, especially if it also means being able to impose stronger regulation.
But whether the sacrificing of sweepstakes casinos is too high a price to pay for the legalisation of online casinos is a debate for another day.
