Banned, Fined, and Redefined: The 2025 State Crackdown on Online Sweepstakes

Recent events around the country indicate that online sweepstakes are facing increasing scrutiny and concerns from legislatures, regulators and others.

“Montana just criminalized everyday digital promotions with a law so broadly written it fails to name what it bans,” according to a spokesperson for the Social and Promotional Games Association (SPGA).¹ Montana Governor Greg Gianforte signed into law Senate Bill 555, which becomes effective on October 1, 2025, banning “any platform, website, or application that knowingly transmits or receives gambling information, allows consumers to place a bet or wager using any form of currency, and makes payouts of any form of currency.”² Penalties include up to 10 years in prison and fines of up to $50,000.³

According to its website, the SPGA advocates for “social and promotional gaming” that involves “innovative social and promotional elements” of gaming through “clear regulations that allow the industry to flourish.”⁴ A May 23, 2025 press release from SPGA noted that the new Montana law “diverg[es] from states like Arkansas, Maryland, Mississippi, and Florida, which have all rejected similar bans in 2025.”⁵

Meanwhile, Virtual Gaming Worlds (VGW), an “interactive entertainment company” that focuses its offerings on “free-to-play games,” including Chumba Casino, Lucky Land Slots, and Global Poker,⁶ has “exited Montana in anticipation of the law’s enforcement.”⁷

On April 11, 2025, VGW noted that it “voluntarily withdr[e]w its services” from Delaware due to the Delaware Department of Gaming Enforcement (DGE) demanding that VGW cease its operations in the state.⁸ Within VGW’s website press release on the topic, VGW asserted that it tried and failed to meet with DGE, claiming that DGE had previously “acknowledge[ed] that VGW’s activities had caused no harm to Delaware residents” but was being urged to act by the Delaware Lottery.⁹ VGW has also elected to “terminate its sweepstakes operations in New York” as it has done in Nevada, Connecticut, Washington, Michigan, and Idaho.¹⁰

Across the country, the Connecticut Senate passed Senate Bill 1235 (SB 1235) “target[ing] online sweepstakes casinos… that simulate gambling games but operate outside traditional gaming laws by using virtual currencies and offering prizes.”¹¹ The bill text includes any online “games, contest, or promotion… that utilizes a dual-currency system of payment allowing the payer to exchange [or win] currency for any prize or award or cash or cash equivalents… and simulates any form of gambling.”¹² SB 1235 also includes language defining “Peer-to-peer” and “Progressive game[s].”¹³ Previous SB 1235 iterations included prohibitions against “third-party lottery courier services and any resale of lottery tickets,” but the version passed by the Connecticut Senate omitted such language.¹⁴

Connecticut, along with other states, appears to be “seeking to assert regulatory control over an increasingly complex digital gambling landscape.”¹⁵ The penalties with SB 1235 include “up to five years in prison and fines of up to $5,000.”¹⁶ SB 1235 further seeks to expand online poker, add sports betting on collegiate teams during tournaments, and legalize wagering on boxing and mixed martial arts.¹⁷

Interestingly, Connecticut’s legislature included language in the bill “propos[ing] the establishment of multi-state gaming compacts” to allow the state to become part of the Multi-State Interstate Gaming Agreement (MSIGA) alongside New Jersey, Michigan, and Pennsylvania.¹⁸ Pennsylvania’s Governor, Josh Shapiro, signed the MSIGA on April 23, 2025, joining New Jersey (joined in 2017), Nevada (joined in 2014), Delaware (joined in 2014), West Virginia (joined in 2023), and Michigan (joined in 2022)¹⁹ to “provide[] the same assurances offered throughout other online gaming options by using a fair and thoroughly tested platform,” as well as providing “larger prize pools without requiring an increase in buy-in amounts” in poker.²⁰

Similarly, the Louisiana legislature passed SB 181, currently up for final consideration on the floor, through both House and Senate Committees.²¹

Ohio has also proposed a bill that, among other gaming-related legislative changes, would prohibit sweepstakes – House Bill 298.²²

Seven states ran bills regarding sweepstakes prohibitions in the most recent legislative session, including New Jersey, Mississippi, Maryland, Connecticut, New York, Nevada, and Florida.²³ State regulatory bodies in Michigan, Maryland, and West Viriginia have all taken action, including cease-and-desist letters and other means of compliance enforcement, such as subpoenas.²⁴ Ten lawsuits were filed across the United States, including claims as to “fraud, breach of contract, unfair and deceptive trade practices, and violations of various state gambling loss recovery statutes.”²⁵

Intriguingly, however, the wagering public appears to continue to engage in sweepstakes gaming. Online sweepstakes platforms have increased “their player base at around three times the rate of real-money online casinos,” slowed only by a lower conversion rate (sign up versus deposit) and smaller, more infrequent deposits.²⁶

The focus on sweepstakes in many legislative houses likely has something to do with sweepstakes being viewed by operators as “a unique, fast-growing alternative to acquire and engage players legally.”²⁷ While implementation and impact remains to be seen as to proposed legislative changes, 2025 is certain to be yet another notable year in the gaming space.

Footnotes

1. Montana Just Outlawed Something It Couldn’t Even Define, The SPGA (May 23, 2025), https://thespga.org/montana-sb555-response/ (last visited June 2, 2025).

2. Montana Becomes First US State to Ban Sweepstakes Gambling, Yogonet (May 26, 2025), https://www.yogonet.com/international/news/2025/05/26/106048-montana-becomes-first-us-state-to-ban-sweepstakes-gambling (last visited June 2, 2025).

3. Id.

4. The SPGA, The SPGA, https://thespga.org/ (last visited June 2, 2025).

5. The SPGA, Supra note 1.

6. VGW, VGW, https://www.vgw.co/ (last visited June 2, 2025).

7. Yogonet, Supra note 2.

8. VGW Response to Delaware Division of Gaming Enforcement Statement, VGW (April 11, 2025), https://www.vgw.co/latest-news/media-releases/vgw-response-to-delaware-division-of-gaming-enforcement-statement/ (last visited June 2, 2025).

9. Id.

10. VGW to End Sweepstakes Casino Operations in New York Amid Regulatory Uncertainty, Yogonet (May 30, 2025), https://www.yogonet.com/international/news/2025/05/30/106395-vgw-to-end-sweepstakes-casino-operations-in-new-york-amid-regulatory-uncertainty (last visited June 2, 2025).

11. Erik Gibbs, Connecticut, Louisiana Could Follow Montana with Sweepstakes Bans, Next.io (May 29, 2025), https://next.io/news/regulation/states-could-follow-montana-with-sweepstakes-bans/ (last visited June 2, 2025).

12. S.B. 181, 2025 Leg., Reg. Sess. (La. 2025), https://legiscan.com/LA/bill/SB181/2025 and https://www.legis.la.gov/Legis/ViewDocument.aspx?d=1404479 (last visited June 2, 2025).

13. S.B. 1235, 2025 Gen. Assemb., Reg. Sess. (Conn. 2025), https://legiscan.com/CT/bill/SB01235/2025; and https://www.cga.ct.gov/2025/TOB/S/PDF/2025SB-01235-R00-SB.PDF (last visited June 2, 2025).

14. Gibbs, Supra note 11.

15. Id.

16. Id.

17. Id.

18. Id.

19. Multi-State Online Poker in the US, Pokerfuse (last updated May 7, 2025), https://pokerfuse.com/online-poker/united-states/us-multi-state-online-poker/ (last visited June 2, 2025).

20. Governor Shapiro Signs Multi-State Internet Gaming Agreement, Bringing Pennsylvania Into Shared Online Poker Market, Pennsylvania Gaming Control Board (April 23, 2025), https://gamingcontrolboard.pa.gov/news-and-transparency/press-release/governor-shapiro-signs-multi-state-internet-gaming-agreement (last visited June 2, 2025).

21. Erik Gibbs, Connecticut, Louisiana Could Follow Montana with Sweepstakes Bans, Next.io (May 29, 2025), https://next.io/news/regulation/states-could-follow-montana-with-sweepstakes-bans/ (last visited June 2, 2025).

22. Tom Nightingale, New Ohio Online Casino Bill Would Limit Market, Ban Sweepstakes, SBC Americas (May 21, 2025), https://sbcamericas.com/2025/05/21/new-ohio-online-casino-bill-would-limit-market-ban-sweepstakes/ (last visited June 2, 2025).

23. Steve Ruddock, Prohibitions Sweep the Nation, Straight to the Point (March 17, 2025), https://straighttothepoint.substack.com/p/prohibitions-sweep-the-nation (last visited June 2, 2025).

24. Steve Cosentino, Aalok Sharma, and Donta Dismuke, Playing on the Edge: Sweepstakes Casinos Face Challenges, Stinson LLP (May 7, 2025) , https://www.stinson.com/newsroom-publications-playing-on-the-edge-sweepstakes-casinos-face-challenges (last visited June 2, 2025).

25. Id.

26. Tom Nightingale, Optimove: Sweepstakes Gaining New Players Much Faster Than Online Casinos, SBC Americas (May 30, 2025), https://sbcamericas.com/2025/05/30/sweepstakes-player-acquisition-report/ (last visited June 2, 2025).

27. Id.