Sweepstakes: what started as simple “fun” has ballooned into a billion-dollar industry. And it’s gotten so big that the heavyweights of the U.S. regulated gambling world are lining up to take their shot at discrediting this tyro, but booming, iCasino sector.
From loss-reclamation lawsuits to cease-and-desist orders, it would seem that everyone from consumers to Tribes and commercial operators–and even state regulators–are ramping up the pressure and looking for ways to prevent sweepstakes from targeting U.S. players.
But is this a simple case of a disruptive sector ruffling industry feathers, as the sweeps community maintains? Or are these platforms simply a cynical ploy to disguise illegal gambling?
Booming
Sweepstakes have existed for years. But in the age of digital gaming, they’ve become an increasingly popular and clever legal workaround that provides operators with a regulation-free and tax-free gateway into the world of iGaming – although this is hotly protested by proponents.
Unlike traditional online casinos, these sites advertise ‘free play’ and ‘free coins’; gambling without the downside of gambling if you like.
But here’s the catch: sweepstakes can also lead to players spending real money, albeit on a secondary ‘currency’, which through artful accounting is not technically connected to winning prizes. These winnings can be cashed-out and turned into financial rewards.
With a projected compound annual growth rate of 31 percent, the global sweepstakes market is booming and is on track to rake in an estimated US$6.9 billion (£5.59 billion) by 2025, according to data shared by Eilers & Krejcik Gaming.
If the market continues to grow at this pace, experts predict it could soon take over the U.S. real-money iGaming sector, so it’s no surprise sweepstakes are turning heads.
Mounting Legal Challenges
But now from California to Florida, the number of class-action lawsuits surfacing across America is ballooning as disgruntled players, bolstered by the increasingly anti-sweepstakes climate, challenge the legality of sweepstake gaming sites in court, attempting to recoup money they spent on these sites.
While multiple sweepstake operators have been named in cases, one operator is prevalent on the court docket slips: Virtual Gaming Worlds (VGW). This Australian-owned social/sweepstakes casino operator is one of the biggest. Active in North America for over a decade, it operates Chumba Casino, Luckyland Slots, and Global Poker.
iGF reached out to VGW, who told us that while they cannot comment on the legal specifics of cases – and that the company “entirely rejects” accusations that it is offering illegal gambling.
According to VGW, the rise of sweepstakes has “resulted in some negative commentary from specific groups with clear agendas making baseless claims and misleading allegations”.
Hush Money
But, in Washington and Kentucky, VGW and other sweepstakes operators have quickly opted to settle lawsuits, paying multi-million-dollar sums to make them disappear.
And this has led some legal minds to speculate that sweepstake operators are keen to avoid establishing a legal precedent that goes against them, powering similar cases nationwide.
Meanwhile, regulators in states with legal iGaming regimes, such as Michigan, Delaware and Connecticut, have protected their legal online casino industries and issued cease-and-desist letters to sweepstakes operators, including VGW, who have opted to exit the market rather than assert their right to operate through legal channels.
Tribes and Titans Unite
With the anti-sweepstakes momentum building at both the legal and regulatory levels, signs suggest the gig could soon be up for sweepstakes operators. And the opposition is not just growing; it’s uniting.
The threat of this common enemy is perceived as so great that it’s even brought together mortal enemies in California, where battling commercial and Tribal entities have temporarily buried the hatchet to fight their common sweepstakes enemy.
Victor Rocha, Conference Chair of the Indian Gaming Association, for example, has been busy rallying Tribal troops, hosting webinars, taking to X to raise awareness of the issue and recently posting that: “Nothing unites the California tribes like a good ass whoopin’.”
Meanwhile, the American Gaming Association (AGA)–the U.S. trade representing legal betting brands– has also stepped into the debate.
In August, they denounced sweepstakes as real-money gambling sites and, in a memorandum, urged state regulators and lawmakers to take action and “prevent unlicensed operators from exploiting loopholes in sweepstakes regulations to offer online real-money gambling”.
The AGA has made its stance clear, saying sweepstakes casinos are “entities that have intentionally designed business models to circumvent or exploit ambiguity in state gambling laws and the regulatory frameworks”.
As such, they threaten the integrity of the regulated industry, remove significant tax and revenue opportunities and “deprive” players of responsible gambling protections.
Sweepstakes Fight Back
In response to the increasingly hostile North American operating environment, the sweepstakes industry has responded in kind, consolidating strength and creating the gaming industry’s first sweepstakes trade body – the Social and Promotional Gaming Association (SPGA).
As well as aiming “to highlight the well-established legality and legitimacy of social sweepstakes games, providing regulators, policymakers and consumers with a comprehensive understanding of these offerings”, SPGA firmly denies sweepstakes qualify as gambling, comparing the situation as similar to “teething pains” faced by any disruptive industry and not dissimilar to that faced by some of the biggest U.S.-licensed brands in their early days as Daily Fantasy Sports operators.
Battle Lines Drawn
With all sides gearing up and the battle lines drawn, 2025 will likely bring an all-out industry showdown as the debate reaches fever pitch.
But the key question is: which side will state regulators and legislators take? Will they uphold the sweepstakes casino model or follow the example of Michigan, Connecticut and Delaware and send these operators packing?
We suspect we won’t have long to wait to find out.
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