Tennessee House Bill 1885, the first bill of its kind addressing the sweepstakes casino industry, is awaiting its hearing before the House Finance, Ways, and Means Subcommittee. It’s currently slated for the April 14 hearing.
Originally, it was filed as a bill that would ban sweepstakes casinos.
However, it was amended in March. Now, instead of outlawing sweeps casinos, HB1885 defines what online sweepstakes games are and directs the Tennessee Advisory Committee on Intergovernmental Relations (TACIR) to perform a study on the online sweepstakes games available in Tennessee. This study will estimate the revenue that would be generated by the state if such games were taxed and regulated in the same way sports betting is in Tennessee. TACIR must report the findings to the speakers of the Senate and the House by Jan. 31, 2027.
So, for the first time, a state is considering legislation that would assess the potential of regulating sweepstakes casinos. (New Jersey has previously considered legislation that would regulate the industry without studying it, but that bill never made any progress — unlike HB1885.)
Tennessee’s 2026 legislative session ends on April 24, so HB1885 still needs to finish its process in the House and fully clear the Senate within the next couple of weeks in order to pass.
SGLA: ‘We look forward to engaging with Tennessee lawmakers on crafting effective regulation’
The Social Gaming Leadership Alliance (SGLA) welcomes this study of the sweeps gaming industry in Tennessee.
“It’s imperative that Tennessee look at the online gaming landscape and make informed decisions, and we are pleased to see them joining the ranks of states that are choosing to study and craft informed policy on this front and not reflexively banning Social Plus games based on incomplete information,” Sean Ostrow, Managing Director of the SGLA, told Sweepsy. “We look forward to engaging with Tennessee lawmakers on crafting effective regulation, which would apply across the entire industry and keep Tennessee consumers safe while generating meaningful tax revenue.
“SGLA will always be supportive of any state policy that provides consumer protection guardrails and a fair taxation framework for online games. Tennessee is taking the first formal step towards understanding the landscape, and we hope that a comprehensive policy discussion will ensue.”
Based upon the prevailing Tennessee sales tax rate, the SGLA estimates that a robust market of sweepstakes casinos would generate approximately $25 million in annual state sales tax on player purchases.
“But it’s up to Tennessee lawmakers as to how to apply a tax, at what rate, and whether or not they look at taxing other verticals beyond merely Social Plus games” Ostrow said.
Could other states follow Tennessee’s lead?
Does Ostrow think other states could implement these tasked studies? Yes.
“Tennessee is setting a strong example by getting the facts before rushing to judgment,” Ostrow said. “We believe that when lawmakers take the time to study this issue thoroughly, they will be able to weigh the merits of regulating and taxing Social Plus. Prohibiting this established industry and driving out the good Social Plus actors who want to be regulated only exacerbates the problems states are facing with illegal online real-money gambling.”
He noted sweepstakes casino games have operated lawfully across the country for more than a decade and are enjoyed by millions of Americans, including approximately 230,000 Tennessee adults.
“These platforms are always free-to-play, restricted to adults 21 and over, and equipped with industry-leading consumer protections including robust age verification, data privacy safeguards, and responsible social gameplay tools,” Ostrow said. “SGLA stands ready to work with Tennessee officials throughout this study process to provide data, answer questions, and help develop a regulatory framework that protects consumers while preserving access to these popular games.”
Studies forecast similar economic impact in Virginia, Pennsylvania
The SGLA is relying on recent economic studies to convince lawmakers in Pennsylvania and Virginia that sweeps games could deliver financial gains if legalized and regulated. The reports, prepared by Eilers & Krejcik Gaming, outline how large the market is in each state and how much more revenue could be captured if operators were licensed and taxed.
In Virginia, analysts estimate that players spent about $423 million in 2025, representing roughly 3.4% of the national market. Pennsylvania’s projected player purchases are $446 million, or 3.6% of U.S. activity.
Sweepstakes operators spend more than $1.8 billion nationwide on marketing, payment processing, and cloud hosting, per EKG analysts. In Virginia, that spending benefits local firms like Capital One and Oddsjam; Pennsylvania companies such as PNC Financial Services and SteadyPicks Gaming see similar profits.
Hosting services from Amazon and Microsoft, both of which operate or plan major data centers in the two states, add more economic benefits. The model shows that these supply-chain relationships support more than 2,700 U.S. jobs and generate hundreds of millions in household earnings.
A legal market could bring up to $40 million annually in fresh revenue, per EKG.
These reports illustrate that formal regulation could turn existing activity into a steady revenue stream for state governments. In Virginia, a licensing system together with a tax on player purchases could bring in more than $30 million a year. Pennsylvania’s larger market could generate over $40 million annually under a similar structure.
The report shared two ways the state could generate revenue. First, states could charge operators an annual registration or licensing fee. Analysts suggest that a fee of around $100,000 per brand would be high enough to ensure serious applicants but not so high that it drives operators away.
Second, states could apply sales-style taxes to player purchases. In Virginia, a 5.3% rate would bring about $22.4 million, while higher local rates could push that figure closer to $29.6 million. Pennsylvania’s average digital-goods tax rate of 6.34% would generate $28.3 million, and that number could rise to $35.1 million if all operators were active in the state.
