By Stephen Crystal – Founder & CEO, SCCG
New Jersey is once again setting the tone for the rest of the country when it comes to gaming regulation—this time by leading the charge against online sweepstakes casinos.
Earlier this week, the Assembly Tourism, Gaming and the Arts Committee voted to advance Bill A5447, legislation that would ban online sweepstakes casinos across the state. The bill, sponsored by Assemblyman Clinton Calabrese, zeroes in on platforms that allow players to win cash prizes through the use of virtual currencies. If passed, the law would equip both the Division of Consumer Affairs and the Division of Gaming Enforcement with the power to crack down on these sites, categorizing them as a form of illegal gambling.
This move signals a dramatic shift in tone from Calabrese himself, who just months ago introduced a bill aimed at bringing sweepstakes casinos under the same regulatory umbrella as licensed online casinos and sportsbooks. That earlier proposal, which would have set a framework for licensing, taxing, and regulating the sweepstakes model, appears to have been shelved in favor of a stricter approach.
What’s at Stake?
Sweepstakes casinos operate by offering players free gold coins and sweepstakes coins upon sign-up—bypassing direct cash bets and, in theory, sidestepping traditional gambling laws. While these platforms often advertise as legal under U.S. sweepstakes law, critics argue the model mimics real-money online casinos without adhering to the same legal and tax standards.
Supporters of the bill argue that these platforms take advantage of loopholes, undermining the integrity of the state’s highly regulated gaming industry. Eric Shuffler, speaking on behalf of the Sports Betting Alliance (which includes operators like DraftKings, BetMGM, and Fanatics), testified that these sites represent a “serious threat” to the licensed ecosystem. He highlighted that consumers often purchase virtual currency for entertainment but can redeem sweepstakes winnings for cash, which blurs the line between legal promotional contests and de facto gambling.
More alarmingly, Shuffler pointed out that sweepstakes sites often lack player protections, financial safeguards, and responsible gaming protocols. He also expressed concern about their marketing tactics, accessibility to minors, and their reliance on crypto-based transactions—many of which fall outside federal and state financial regulations.
A Legal Grey Zone—But for How Long?
New Jersey Attorney General’s Office legislative director Stephen Finkel added that sweepstakes casinos exploit outdated laws that were never intended to regulate this type of digital gaming. He argued that expansion of gambling in the state must be approved by voters through a constitutional referendum—something sweepstakes casinos have effectively bypassed.
Yet the conversation around regulation versus prohibition isn’t one-sided.
The Social and Promotional Games Association (SPGA) has voiced its opposition to the bill, warning it could stifle innovation and push operators into more questionable territories. The group urges lawmakers to revisit the initial regulatory approach to create a safer, licensed environment rather than rely on prohibition, which historically drives consumers to unregulated offshore platforms.
National Ripple Effects
New Jersey’s action follows a failed attempt by Florida lawmakers to restrict similar platforms earlier this month. Meanwhile, Connecticut, New York, and Maryland are considering comparable legislation, while other states like Arkansas and Mississippi have recently rejected similar bans.
The bill does leave room for exceptions—namely, for games that offer a free entry method or are tied to the purchase of small-dollar food or soft drinks, preserving promotional contests akin to what brands like McDonald’s or Coca-Cola have long used in marketing campaigns.
But make no mistake: the momentum behind Bill A5447 suggests a tipping point is near.
What This Means for the Industry
New Jersey has long been a trailblazer in regulated online gaming. The state’s recent pivot against sweepstakes casinos reflects growing pressure to protect consumers, preserve tax revenue, and reinforce regulatory integrity.
Whether this is the beginning of a nationwide sweepstakes casino crackdown—or a temporary political wave—depends on how the courts and industry stakeholders respond. For now, the message is clear: in New Jersey, the era of legal grey areas is coming to an end.
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