Article By Stephen Crystal
New York is taking a firm stand against online sweepstakes casinos, setting the stage for a legal showdown that could reshape the digital gambling landscape. On Tuesday, the New York Senate Racing, Gaming, and Wagering Committee unanimously passed SB 5935, a bill aimed at shutting down online sweepstakes operators offering casino-style games such as slots, poker, and sports betting.
This move, spearheaded by Sen. Joseph Addabbo, is part of a broader effort to curb unregulated gambling, protect consumers, and reinforce New York’s existing gaming laws. If passed into law, anyone caught facilitating online sweepstakes gaming could face fines ranging from $10,000 to $100,000 per violation, along with potential license revocation for businesses involved.
Why Is New York Banning Online Sweepstakes?
Despite having legal retail casinos and the nation’s largest sports betting market (generating $2.08 billion in 2024), New York has yet to legalize online casino gaming (iGaming). However, sweepstakes casinos have thrived in this legal gray area, allowing players to purchase virtual currency that can be redeemed for cash prizes—effectively mimicking real-money gambling without being classified as such.
According to the bill, these platforms lack proper consumer protection, anti-money laundering oversight, and responsible gaming safeguards, making them a regulatory nightmare. Lawmakers argue that they present “unfair competition” to state-regulated casinos while operating untaxed and unregulated.
A Nationwide Crackdown on Sweepstakes Casinos
New York isn’t alone in targeting sweepstakes casinos. Maryland recently passed a similar bill, and Connecticut, Florida, Mississippi, and New Jersey have also introduced legislation to regulate or ban sweepstakes gaming. Even Nevada, the gambling capital of the U.S., is taking action against unregulated sweepstakes-style gaming.
Last week, Connecticut issued a suspension order to High 5 Games, a company providing sweepstakes-style casino games, accusing them of offering unregulated gambling to residents, including those on the state’s exclusion list.
Pushback From the Sweepstakes Industry
Naturally, the sweepstakes gaming industry isn’t backing down. The Social and Promotional Games Association condemned the bill, stating:
“Albany legislators have no business dictating to New Yorkers what games they can play on their phones. This deeply flawed legislation is an affront to personal freedoms, an insult to New York voters, and a colossal waste of government resources.”
This backlash highlights the ongoing legal and ethical debate over where sweepstakes casinos fall in the gambling ecosystem. While regulators argue that these platforms exploit legal loopholes, operators claim they are a legitimate, legal form of entertainment.
What’s Next?
With New York lawmakers moving aggressively to regulate online gambling, the fate of sweepstakes casinos in the state is uncertain. If SB 5935 passes, it could set a precedent for other states looking to shut down unregulated online gaming operators.
For players, operators, and investors in the industry, the message is clear: the era of unregulated online sweepstakes gaming may be coming to an end.
Will New York’s move push other states to follow suit, or will sweepstakes casinos find new ways to adapt? The battle over online gaming regulation is just getting started.
