Sweepstakes casino operators are two years into a wave of legal scrutiny and regulatory pressure that has changed the sweeps ecosystem.
Last year saw significant jurisdictional shutdowns in states like California, New York, and New Jersey, kicking off the market shrinkage that continued into 2026. Legislatively, five states passed bills banning sweepstakes casinos this year, while five states saw such bills fail.
What will the upcoming legislative hearings bring for the sweepstakes casino industry?
Sweepsy spoke with Peter Hammon, Senior of Counsel at Vela Wood, a firm focused on sports wagering, land-based and online gambling, and technology. He thinks the tide has shifted completely against operators.
“About two years ago, it became relatively clear that the sweepstakes market had caught the attention of state regulators and tribal leadership,” Hammon told Sweepsy. “Once that happened, the die was cast for the sweepstakes casino traditional model.
“The sweepstakes industry under the previous model — dual currency — is dead. It will never come back in any meaningful capacity as a legal product. There are tons of other offshore and/or illegal platforms that are operating to this day under that same theory.”
A daunting lobbying battle for sweeps?
Hammon said sweeps casinos may have gotten too popular for their own good. He said the reason that these companies like VGW were so successful in the first place is because they had flown under the radar of state regulators and in large part the casino industry as well.
“They were basically able to completely avoid the level of scrutiny and regulation that they now face,” he said. “Once the sweepstakes casino industry got big enough to garner the attention that it did, it was over. At that point then it became the mission of tribal lobbyists to curtail or shut down the industry completely and they have been very successful. Any of the remaining states will be targets as well.
“(Sweeps operators are) never going to win a battle in the court of public opinion with state legislators either. Because the core argument is, ‘We want people to be able to gamble, but we don’t want to face gambling regulation.’ It’s not a winner.”
Once sweepstakes casino operators began to get so large that they were drawing the type of attention that they faced, it was inevitable that states would place significant restrictions on the activity, Hammon said.
“That’s not to say it’ll go away completely,” he said. “You may see a different version of the sweepstakes casino model. I’m starting to see some models now that either do incorporate some genuine non-casino style products that are also being offered along with the sweepstakes casinos.
“It just means that the states are going to make it so difficult and so taxing from a regulatory standpoint that it’ll be effectively no longer a product that people pursue. You’re seeing that already in some of these jurisdictions where now instead of it being a completely unregulated activity, there are significant limits placed on the way that the casinos can operate.”
The next gray market gaming platform …
Hammon said the number of states where Sweeps Coin gameplay is not illegal will continue to dwindle.
“Some will dwindle in this session, and then over the coming years, that number will continue to fall,” he said.
Every state is focused on sweepstakes and prediction markets, Hammon said, which this means that “some other product will fall through the cracks much like sweepstakes have fallen through the cracks and grown and grown and grown while states were focused on regulating sports betting for the first time and all their resources were dedicated to launching that activity.”
He continued: “That means something else is going to grow now. There’s an incubator for gray market or new innovative products that are unregulated. Question is — what is that going to be?”
In some cases, he thinks it’s going to be online skill games, which is what the owner of Kickr pivoted to after shutting down Kickr and opening GetGud, an online skill games sweeps gaming platform.
