The legal gambling landscape in the United States is becoming more diverse daily. Before the repeal of PASPA in May 2018, only one state (Nevada) had widespread legal sports betting; now, 39 legal states have sports betting.
While nearly 40 states have opened themselves to legal sports betting to tax and regulate the industry, some creatives have stepped in to skirt around regulation.
These are sweepstakes games, which are technically free to play but have another layer in which customers can spend money on a virtual currency for the possibility of using that virtual currency to win money.
ProphetX, Fliff, 10 Ten Gaming, Blazesoft, FSG Digital, Gold Coin Group, and High 5 Entertainment are some examples of sweepstakes companies.
Let's examine why sweepstakes games are so popular and why lawmakers might soon step in.
What are sweepstakes games?
Sweepstakes games have been around for many years. My favorite example of a sweepstakes game is Publisher's Clearing House, but for the younger crowd, I think of the Monopoly Game at McDonald's as an example. To meet the legal definition of gambling, a game needs to have three elements: prize, chance, and “consideration,” which is another way of saying there is a cost to playing the game.
Sweepstakes games require no actual cost to play. Players can claim free virtual currencies to play. These virtual currencies can't be redeemed for real money.
There are many types of sweepstakes games, from traditional casino games like slots and blackjack to those focusing on sports wagering. s play with free “coins” that have no value but can purchase other “coins,” which can then be used to cash out into real money. Companies also give out limited amounts of the “coins” for free under the “no purchase necessary” rule for sweepstakes.
Learn More About Sweepstakes Casinos
Why is this an issue?
The American Gaming Association recently called into question the legality of sweepstakes games in a memo, saying that they aren’t facing the same scrutiny from regulators as legal U.S. sportsbooks and online casinos.
Part of the memo reads: “The lack of regulatory oversight presents many risks for consumers as well as the integrity and economic benefits of the legal gaming market through investment and tax contributions. These sweepstakes-based operators have weak (if any) responsible gaming protocols and few self-exclusion processes. There is no independent product testing to ensure basic fairness to players, and although many claim players must be 18+, age verification procedures if they exist, are often questionable. The opaque nature of these operations also presents a prime opportunity for illegal activity and enriching bad actors.”
Several states, including Connecticut and Michigan, havegets his way, they'll have to leave the lucrative New York market as well.
Sweepstakes and social gaming operators formed the Social and Promotional Gaming Association (SPGA) in August 2024 to form an advocacy group for sweepstakes games and work with regulators and consumers to help show the legality and legitimacy of the games and ensure that everyone understands how they work.
The sweepstakes had an estimated gross revenue of $4 billion in 2023, which only grew in 2024. This will be an issue to monitor closely in 2025.
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