Since originally launching in the US market in 2016, online social and sweepstakes casinos have blossomed into an $8 billion per year industry.
Critics of sweepstakes casinos insist that they operate in a grey area of the law that enables them to offer casino gambling-type games like slots, table games and even live dealer areas without the requirement of being licensed and regulated as a gambling operation.
Since it is possible to play these games without ever making a purchase, social and sweepstakes casinos are considered to be similar to sweepstakes style contests held by companies such as fast food outlets.
Some states, especially those that are home to legal and regulated online casino gambling, are beginning to take issue with what they view as a legal loophole. Michigan has already moved to ban sweepstakes casinos. Now, both New York and New Jersey are heading in that direction.
Unlike real-money counterparts, you won’t play with or directly win money at sweepstakes casinos, such as FunRize and No Limit Coin. If you stick with the social casino side of the industry, you’ll play with gold coins for fun and entertainment. However, if you want prizes, including the change to exchange winnings for cash, you must play with sweepstakes coins.
There’s no charge for any of these coins and you’ll be presented with several avenues to acquire coins for game play free of charge. It is possible to purchase gold coin packages, but sweepstakes coins are always gratis.
New York Senate Passes Ban
The New York State senators in New York have put the wheels in motion to put a ban of sweepstakes casino sites in place across the Empire State, reports NY Bet. The New York State Senate Racing, Gaming, and Wagering Committee voted unanimously in favor of Senate Bill 5935.
If this bill moves on to become law, not only will it ban sweepstakes casinos, it would punish any financial company that processed payments for sweepstakes casinos with significant fines.
New Jersey Changes Course
Originally seeking to tax sweepstakes casinos operating in the Garden State, New Jersey lawmakers are now taking on the same tack as their New York counterparts and are seeking to ban these sites.
Assembly Bill 5447, introduced in March 2025 by Rep. Clinton Calabrese, is designed to ban sweepstakes casinos in New York. Calabrese had originally put forth a bill that would regulate sweepstakes casinos in the same manner as real-money NJ online casinos.
Taxation Is the Major issue
The reason behind this sudden consternation over sweepstakes casinos is the oldest story in the books. It’s all about money. Since sweepstakes casino sites aren’t regulated like real-money gambling sites, there’s also no requirement for these online sites that operate with virtual currency to pay state gaming taxes.
That’s a big deal. In New York, for instance, the taxation rate on real-money online sports betting sites is 51%. Online casino gambling is not legal in New York.
Another issue on the table, certainly in New Jersey, is the feeling that sweepstakes casino sites are taking away players that might otherwise be gambling on real money betting sites and thus generating revenue for the government.
However, a social casino lobby group insists that this isn’t the case. Citing studies that have been conducted by independent research sites, the Social and Promotional Games Association (SPGA) insists these studies show that people who play at social casinos aren’t driven by the same motivation as someone gambling with real money. Social and sweepstakes casino players aren’t looking for the chance to win money. Instead, their motivation is to play games for fun and free of the consequence of losing their own money.
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