California Governor Gavin Newsom this week signed a bill banning sweepstakes casinos in the state. The hugely popular but controversial casinos model skirts US gambling laws through a sweepstakes system. However, California is now the latest state to ban the practice. It also made it illegal for sweepstakes operators to serve Californian players. So, what next for the $4 billion sweeps casino business?
This article will look at the ban in California, and how and why it came into effect, as well similar efforts — successes and failures — in other states, and the potential economic consequences of these moves. This is what you need to know about California's sweepstakes casino ban.
California's Ban Takes Effect in January 2026
Sweepstakes casinos let players gamble with coins, that can be exchanged for real money. Crucially though, the coins that are transferable for money are not the ones players buy. Players buy a different kind of play money, with no outside value, and are "gifted" the equivalent value of exchangeable 1:1 USD sweeps tokens "for free."
To keep within the letter of the law, players can also obtain $1 sweeps regularly for free. Either through letters, daily logins or social media promotions. This all allows sweeps casinos to circumnavigate U.S. online gambling laws — or so they thought for many years.
By some estimates the sweepstakes casino business was worth $1 billion in California alone — that will now mostly disappear after night. Governor Newsom signed Assembly Bill 831 in law this week. The ban will take effect on January 1 2026, closing a legal grey area in the law for good.
Meanwhile online casino real money play remains as popular as ever, in both the half dozen regulated states that have it and at offshore casinos. If you want to find the very best options with the most bang for your buck, a quick check of expert comparisons and reviews in order.
The powerful Californian tribal casino lobby heavily backed the ban on sweeps casinos. Tribal casinos in California are worth multiple billions to the economy. The bill passed the State Assembly and the State Senate with two unanimous votes.
That was despite a pushback from sweeps casino trade groups and representatives. Some sweepstakes operators have already closed their operations to Californian players and are in the process of returning account funds.
States Moving to Ban, Some Unsuccessfully
California joins the following states in banning sweepstakes casinos, all of which enacted their bans in the past year:
- Montana
- Washington State
- Idaho
- Connecticut
- New Jersey
Montana became the first state to make the move in May 2025. Its bill specifically outlawed all online gambling played for any kind of currency. Several sweepstakes casino trade groups argued this was overly vague, and swept up some legitimate non gambling sweepstakes promotions.
Other states, like California, have been more specific about banning the dual currency model. New York and Nevada haven't explicitly banned the business model yet, but legal action against operators has seen most leave the two markets. Massachusetts and Ohio are currently considering bills to ban sweepstakes — although both could potentially fail this year.
Speaking of, not all states with opposition to sweeps casinos have seen proposals to ban them go smoothly. Bans were suggested in Florida, Arkansas, Louisiana, Maryland and Mississippi, but lawmakers chose not to enact in all five states. Crucially for operators, Florida is one of the largest U.S. gambling markets.
In Louisiana, the State Legislature got a bill banning sweeps casinos onto Governor Jeff Landry's desk — and he vetoed it. In Mississippi the bill got caught up in a debate over legal sports betting, and ended up failing despite wide support.
The Economic Fallout Could Be Large
Some large operators are already abandoning the space. Large global slots developer Pragmatic Play recently left all of its sweepstakes casino partnerships in the U.S. market. That came after a lawsuit from Los Angeles City Attorney against offshore casino Stake.com, which caught up Pragmatic Play and live casino developer Evolution as they both supply games to Stake.
Although many states with a big market presence are still legal, the writing is on the wall. Sweepstakes casinos have grown from a relatively unknown option to a multibillion dollar business in just a few years. But now their time in the spotlight may be coming to an end.
With New York and New Jersey both aggressively chasing out operators, and California now giving an outright ban — that represents 20% of the US population out of the sweeps market.
That is a big blow but one the business could probably survive. A lot now depends on the outcome of laws in other states. Sweeps casinos have, mostly, reacted to moves against them by ceasing operations in those states. It is possible, but unlikely, a trade group could mount a legal challenge that would successfully set a precedent in future cases. But time is running out.
