US states crack down on sweepstakes casinos

As the pressure builds, even industry giants like VGW Holdings, operator of Chumba Casino, Luckyland Slots, and Global Poker, are beginning to retreat. The company announced it will voluntarily withdraw from New York by August, in what may signal a broader market contraction for the controversial business model.

Louisiana’s SB 181 inches toward law

Louisiana is on the cusp of becoming the second state to formally ban sweepstakes casinos. Senate Bill 181, introduced by Sen. Adam Bass, passed the Senate and is now approaching a final vote on the House floor. If passed without amendments, it will go straight to Governor Jeff Landry for signature.

The bill targets platforms using dual-currency systems, typically combining real money purchases with promotional "sweepstakes coins", to simulate casino-style gambling under a legal gray area. 

The legislation is sweeping, applying not only to operators but also to advertisers, affiliates, and software suppliers. Penalties could include fines of up to $100,000 and five years in prison.

Importantly, SB 181 draws a clear line between unregulated gambling and legal retailer promotions like loyalty rewards, aiming to eliminate what Bass described as “illegal online casinos ripping off Louisiana citizens.”

Connecticut tightens the noose

Meanwhile, Connecticut's Senate unanimously passed SB 1235, a comprehensive bill that not only bans online sweepstakes casinos but also prohibits third-party lottery courier services. 

The legislation cracks down on simulated gambling devices that offer prizes, regardless of whether real money is required to play.

SB 1235 also introduces stringent new advertising rules, including a ban on targeting minors and misleading claims, while boosting enforcement powers for the Department of Consumer Protection. Violators could face felony charges under the new framework.

While aggressive in tone, the bill isn’t entirely restrictive. It paves the way for Connecticut to join the Multi-State Internet Gaming Agreement (MSIGA), potentially revitalizing its online poker market, and proposes broader betting options on in-state college teams and combat sports.

Industry under siege

The legislative blitz follows Montana’s move earlier this month to ban all forms of sweepstakes casinos, regardless of branding. The state’s sweeping language makes it illegal for any digital product to facilitate bets or payouts through simulated gambling using any currency.

Amid this crackdown, VGW’s exit from New York underscores the growing instability facing sweepstakes operators. 

In a statement, the company confirmed its decision to phase out promotional play, starting June 2. All remaining sweepstakes coins must be redeemed by August 1, after which operations will cease entirely in the state.

What could happen next?

The growing scrutiny of sweepstakes casinos by U.S. states signals a broader shift in regulatory priorities. 

As more jurisdictions take aim at gray-area gambling models, operators will face mounting pressure to either adapt or exit key markets. 

For players, this could mean fewer options, but also increased protections.