Sweepstakes Casinos Face Mounting Scrutiny as States Signal Enforcement Push at NCLGS

Sweepstakes casinos took center stage during the National Council of Legislators from Gaming States (NCLGS) Winter Meeting, where panelists warned that the dual-currency model poses a threat to state gaming laws and regulated markets.

The discussion featured current and former state legislators, regulators, and gaming attorneys, including NCLGS President and West Virginia Delegate Shawn Fluharty, gaming attorney Daniel Wallach, former Colorado Division of Gaming Director Dan Hartman, Social Gaming Leadership Alliance (SGLA) Executive Director Jeff Duncan, and Bryan P. Schroeder, general counsel of ARB Interactive.

Some speakers characterized sweepstakes casinos as illegal gambling operations operating outside state oversight. Industry representatives acknowledged the enforcement pressure but maintained that operators are pursuing a long-term legislative strategy rather than court challenges.

The remarks were reported by multiple outlets, including SBC Americas and Casino Reports, which covered the meeting.

Attorneys General Opinions Flagged as Enforcement Tool

Wallach pointed to attorneys general opinions as an underused enforcement mechanism against sweepstakes casinos.

“Attorneys general opinions are one of the underutilized tools to combat illegal sweeps casinos,” Wallach said.

“Within a matter of weeks, we went from a veto to a formal opinion letter from the AG’s office, and subsequent to that, every sweepstakes casino operator has left Louisiana,” he added, describing how an AG opinion letter can swiftly drive operators from a state more effectively than legislative bans.

AG opinions, while not binding law, can be used by regulators and state agencies to justify enforcement actions, issue cease-and-desist letters, and pressure payment processors and vendors to disengage from unlicensed operators.

One of the first AGs to target sweepstakes casinos was New York’s Letitia James. In early June, her office announced it had shut down 26 platforms. Her actions contributed to most sweepstakes casinos exiting the state months before Gov. Hochul’s signature of a ban bill earlier this month.

As Wallach mentioned, Louisiana AG Liz Murrill issued a legal opinion that sweepstakes casinos are illegal. The opinion, paired with enforcement actions by the Louisiana Gaming Control Board, led to a mass exit from the state.

West Virginia’s AG John McCuskey revealed earlier this year that he had sent 47 subpoenas to sweepstakes casinos, with more than 40 platforms leaving the state.

In early November, Minnesota AG Keith Ellison also stepped in. He formally warned LuckyLand Slots, Zula Casino, and Fortune Coins to stop offering their products in the state. However, the platforms have yet to comply.

‘Spirit and Letter of the Law’

Hartman stated that sweepstakes casinos directly conflict with existing gaming statutes, even as he acknowledged the industry’s efforts to self-regulate.

“Sweeps casinos violate the spirit and letter of gaming laws,” Hartman said. “I commend Sweeps’ efforts to self-regulate, but they still need to go through states’ regulatory processes.”

Hartman’s comments reflect a broader regulatory view that voluntary standards cannot substitute for formal licensure, audits, and consumer protection requirements.

Fluharty: ‘Illegal Gambling and Revenue Theft’

Fluharty delivered one of the strongest rebukes of the sweepstakes model.

“Sweepstakes (casinos) represent illegal gambling and revenue theft in many states,” Fluharty said.

Fluharty has previously argued that sweepstakes platforms siphon players from regulated markets without contributing tax revenue or complying with consumer safeguards.

Industry Strategy: Education, Not Litigation

On the defensive, Duncan emphasized the industry’s willingness to be regulated and contribute tax revenue, while calling for sensible frameworks.

“We want to be regulated, we want to pay taxes… We want you to go after the bad actors,” Duncan told attendees.

He framed sweepstakes platforms as potential partners in the state’s gaming ecosystem rather than adversaries. SGLA has previously warned that bans risk stripping billions from state economies. SGLA has pushed for regulation in several states, most recently in Florida.

Meanwhile, Schroeder addressed the common criticism that sweepstakes casinos are not challenging bans in courts because they wouldn’t withstand legal scrutiny.

“Sweeps casino opponents have pointed to the industry’s failure to challenge bans in court as a tacit admission of illegal activity,” he said. In response, he said that the industry’s legal strategy is to educate lawmakers and “play the long game.”

Regulatory Pressure Builds

The NCLGS discussion follows a challenging year for sweepstakes casinos. Six states, including major markets such as California and New York, have passed bills that ban the platforms.

In addition to the AG enforcement actions, gaming regulators in states such as Maryland and Delaware have driven dozens of sweepstakes casinos out of their states.

In response, major operators such as VGW, A1 Development, and Blazesoft have implemented strategies of rolling out new platforms in an attempt to recapture lost revenue.

With 2025 almost gone, 2026 will likely see more crackdowns on the unregulated industry. Lawmakers in three states, including Florida, Maine, and Indiana, have already pre-filed ban bills for next year’s legislative session.