NJ bans sweepstakes casinos: Is this the final blow for social gambling?

The tax hike sends a clear message that the Garden State intends to tighten control over its lucrative online gambling market. As for social gaming sites, the passing of this law marks a decisive rejection of unregulated sweepstakes gambling, a model that has flourished in gray areas for years.

What’s been banned and who’s affected

Sweepstakes platforms that use dual-currency systems, where one currency is used to play and another to redeem real-world prizes, are now explicitly illegal in New Jersey.

Aspect	Details
❌ What’s banned	Sweepstakes casinos with real-money prize redemption
📜 Legislation	Assembly Bill 5447
🚨 Effective Date	Immediate (as of June 30, 2025)
🔍 Enforcement Bodies	Division of Consumer Affairs & Division of Gaming Enforcement (DGE)
⚠️ Marketing Ban	Promoting sweepstakes products now carries criminal penalties

Major sweepstakes casinos such as Global Poker, Chumba Casino, and ClubWPT Gold are likely impacted. Even affiliate marketers and influencers promoting these platforms now face potential criminal liability under the new law.

Higher taxes mean a tougher climate for operators

Alongside the sweepstakes ban, New Jersey lawmakers voted to increase taxes on regulated operators:

Vertical	Old Rate	New Rate (as of July 1)
iGaming (casino/poker)	15%	19.75%
Mobile Sports Betting	13%	19.75%

The tax hikes come despite fierce opposition from operators and advocacy groups. BetMGM and FanDuel even emailed customers warning that the changes would mean fewer promotions and worse odds.

Still, the legislature moved ahead, joining states like Illinois and Michigan, which have recently increased gambling levies to capture more revenue from online play.

Player protection and criminal enforcement take center stage

Assembly Bill 5447 doesn’t stop at sweepstakes. It also introduces new criminal penalties aimed at ensuring the integrity of New Jersey’s gambling sector:

• Bearding (placing bets through another person) is now criminalized

• Insider sports betting and bribing athletes now face stricter penalties

• Influencer promotions of unlicensed gambling are now prosecutable offenses

These escalations reflect New Jersey’s growing intent to treat illegal gambling not just as a regulatory issue, but a criminal one. The move also echoes actions of other states in their own bids to protect players. 

Yet another nail in the coffin

Once embraced as a legal workaround for states lacking full iGaming, sweepstakes casinos are now running out of legal ground. With New Jersey, the most mature online gambling market in the U.S., now off-limits, and five states total banning sweepstakes casinos, the model is rapidly losing national viability.

This latest move by New Jersey may be the most decisive yet, reinforcing already existing precedent for other states to follow. This may push operators, affiliates, and influencers to abandon the space entirely.