New York pulls the plug on sweeps casinos

The ban is a direct attack on the dual-currency system, the operational foundation of this multi-million-dollar industry.

This rapid enforcement, with no transition period, left operators scrambling and, crucially, left thousands of New York players in the lurch.

Why has New York acted?

The immediate crackdown highlights New York's hardening stance against what it sees as unregulated gambling.

The core motivation is simple, sweepstakes casinos, lawmakers argue, sidestep the stringent "guardrails and safeguards" required of legal, regulated betting.

By targeting the dual-currency system, the state is seeking to create a clear separation.

Lawmakers aim to define what is legal (like licensed mobile sports betting) and what is not, ensuring that any future expansion of regulated online casino gaming is not muddled by existing gray-market operations.

Violators of the new law face hefty fines, ranging from $10,000 to $100,000 for each breach, along with the potential loss of any existing or future gaming licenses.

The impact

The consequences of the immediate ban were felt across the state within hours. For many New York residents, their access simply disappeared.

The swiftness of the action has triggered a wave of consumer frustration. One customer publicly aired their dismay on social media:

"man, thanks for nothing @GovKathyHochul. was it really necessary to ban @Novig & @PlayProphetX in New York? terrible news waking up and seeing this."

Who was opposed to the ban

The push to ban sweepstakes casinos was not unopposed. The Social Gaming Leadership Alliance (SGLA), an industry trade group, actively campaigned for Governor Hochul to veto the bill.

The SGLA argued that a ban would harm the state economically, claiming the industry generated over $230 million annually in New York. Their primary message was that regulation and taxation would be a far better path, offering consumer protections while generating crucial tax revenue. Despite their efforts and an earlier show of resistance (including cease-and-desist letters sent to over two dozen operators by Attorney General Letitia James in June), the ban was ultimately signed.

New York joins the club

New York’s ban is not an isolated event; it solidifies a nationwide trend of states legislating against the dual-currency model.

New York is now the sixth state to enact such a prohibition, joining major markets that see the model as a regulatory risk.

Here is an overview of US states which have outlawed or heavily restricted the sweepstakes casino model:

State	Status	Context
Washington	BANNED (Explicitly outlawed)	State law explicitly prohibits online gambling, and courts have affirmed that sweepstakes games fall under this prohibition.
Idaho	HEAVILY RESTRICTED	Prohibits the sweepstakes (cash-redeemable) model; many operators only allow Gold Coin (GC) play, not Sweeps Coins (SC).
California	BANNED (Dual-Currency Model)	Gov. Newsom signed AB 831, banning the dual-currency model. This is a phased ban, unlike New York’s immediate enforcement.
Michigan	BANNED/CEASE & DESIST	Regulators have issued cease-and-desist letters to major operators, treating the model as illegal online gambling.
Nevada	BANNED (Explicitly outlawed)	Strict laws against unauthorized gambling ensure that the sweepstakes model cannot legally operate in the state.
Montana	BANNED (Dual-Currency Model)	Enacted a prohibition targeting the dual-currency model, making it one of the first states to use this modern legislative approach.
Connecticut	BANNED (Dual-Currency Model)	Legislators passed a bill specifically banning the sweepstakes casino model.
New Jersey	BANNED (Dual-Currency Model)	Has taken legislative action to prohibit the games, classifying them as unauthorized gambling.
Delaware	HEAVILY RESTRICTED	Regulators issued cease-and-desist orders, leading major operators to withdraw from the state.

How long can the sweepstakes model survive?

The immediate, decisive action in New York adds urgency to a fundamental question facing the industry: How much longer can the dual-currency sweepstakes model survive these damaging legislations?

The market is rapidly adapting. Industry groups are already pivoting, promoting a "Social Plus" model that emphasizes free-to-play, skill-based, and non-cash-redeemable gaming, aiming to create a clearer legal boundary.

However, for New York players, the ban has created a vacuum.

With regulated online casinos still unavailable in the Empire State, the removal of sweepstakes options means players lose access to the only available online casino-style games.

The biggest risk now is that this prohibition may inadvertently push consumers away from even the marginally regulated sweepstakes market and toward riskier, offshore black-market platforms that offer no consumer protection or regulatory oversight.

Before the gray market turns completely black, the industry needs to fundamentally rethink its operations or face total extinction in key U.S. states.