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New Jersey has joined the list of U.S. states that have chosen to completely ban sweepstakes casinos.
On August 15, New Jersey Governor Phil Murphy signed Representative Clinton Calabrese’s bill, A5447, and Senator John Burzichelli’s accompanying bill S4282 into law. Both bills by Democratic lawmakers were approved by the Assembly and Senate before the legislature adjourned on June 30.
Murphy did not comment on his reasoning behind his signing of the bills.
Sweepstakes has been a controversial topic in New Jersey, where the state’s legal online gaming market reported $2.39bn in revenue in 2024 while revenue through July 31 was $1.63bn, according to the New Jersey Division of Gaming Enforcement (DGE).
Many online sweepstakes sites offer games that are similar to legal iGaming and sports betting apps in New Jersey, which supporters of the ban argue puts a strain on the regulated industry by diverting consumers to a gray area with no regulatory oversight.
Supporters have also described A5447 as a measure to modernize the state’s antiquated gambling laws.
Opponents of the new ban counter that sweepstakes are not a new offering, citing games offered at McDonald’s or the Publishers Clearing House, and describe the bill’s passage as a gift to New Jersey’s casino industry.
Sweepstakes companies also describe their offerings as free-to-play online social games that operate under promotional sweepstakes frameworks.
The Bigger Picture
The new law, which took effect immediately after Murphy signed A5447, bans platforms in New Jersey that offer virtual currency for cash prizes and imposes penalties on unlawful gambling activities.
It specifically prohibits “sweepstakes,” defining them as promotions, contests or games, both online and in-person, where prizes are awarded indirectly “through means as a dual currency system of payment” that allows a participant to exchange the currency for a prize or prize equivalent.
The New Jersey Division of Consumer Affairs (DCA) and DGE will carry out oversight and compliance of the new law.
Other provisions of the new sweepstakes prohibition law include:
• Prohibiting sweepstakes casinos and similar wagering models.
• Establishing fines up to $100,000 for the first offense and $250,000 for subsequent offenses against operators.
• The state’s definition of “Game” has been expanded to include “any game that mimics or simulates such casino-style games or sports wagering.”
• The director of the Division of Consumer Affairs can investigate potential violations of the law by sweepstakes companies, as well as issue cease-and-desist letters.
• Additionally, for each cease-and-desist letter ignored by an illegal operator, regulators will be able to assess a $25,000 fine for each violation.
The new state law is also expected to impact affiliates and influencers with ties to the prohibited websites.
Not all online sweepstakes are banned. New Jersey still permits sweepstakes if there is no cost to enter, while those contests where there is a cost to participate must be ancillary to the purchase of merchandise like food, drinks, or items under $20, or an amount determined by the DCA director.
However, contests become unlawful if the merchandise offered includes coins, tokens, or online credits that have no value other than permitting sweepstakes entry or are able to be exchanged for money or merchandise from an online sweepstakes operator or an affiliated company.
The law also prohibits sweepstakes contests based on the results of a sporting event or the performance of individuals or teams in a game, unless the only method of entry in the sweepstakes is free to participants.
According to the new law, no person under the age of 18 can be permitted to claim a sweepstakes prize exceeding $1,000 without the consent of their parent or guardian, and the value of cash or merchandise prizes are considered income under the New Jersey tax code.
Why You Should Care
New Jersey’s ban on sweepstakes casinos reflects a growing trend by state lawmakers to crack down on various forms of unregulated gambling.
Several states – Montana, Connecticut and Nevada – this year have either passed outright bans on sweepstakes games mimicing casinos or have strengthened existing anti-gambling laws already on their books.
Leading sweepstakes operators also do not operate in other states including Michigan, Delaware, New York and Washington based on establish state laws or enforcement actions taken by state officials.
Louisiana lawmakers earlier this year approved a bill to ban sweepstakes games but Republican Governor Jeff Landry vetoed the bill, arguing it was unnecessary because they are already prohibited in the state.
Landry pointed to a cease-and-desist order sent by the Louisiana Gaming Control Board to offshore gaming operator Bovada that the board was already active in targeting illegal gambling operations.
He said that the board, along with other Louisiana law enforcement agencies, would continue to take similar action regarding “illegal online sweepstakes companies”, which the LGCB duly did through cease-and-desist orders publicly disclosed several days later.
Even with New Jersey’s ban now on the books, the debate over the legality of the websites has carried over to other state capitals.
Lawmakers in states with commercial or tribal casinos have raised concerns about consumer protection, underage gambling, and these unregulated sites not paying gaming taxes.
Multiple states debated legislation to ban sweepstakes operators, only to see them come up short.
Senate Bill 860, which would have banned sweepstakes in Maryland, passed the state Senate only to be referred to the House Ways and Means Committee where it remained at the end of session.
In Mississippi, Senate Bill 2510 that aimed to ban sweepstakes and increase penalties for illegal, online gambling initially passed the Senate unanimously. However, the House of Representatives added language to the bill to authorize online sports betting, which led to the Senate rejecting the amended bill before it eventually died in conference committee.
Bills introduced in Florida and Arkansas also came up short of passage.
In addition to the four states where bills to prohibit sweeps have been signed into law, New York legislators passed Senate Bill 5935A on June 17. Governor Kathy Hochul, a Democrat, has yet to sign the state Senator Joseph Addabbo Jr.’s bill into law.
Hochul has until the end of the year to sign the legislation.
The bill in New York is broader than New Jersey's because it would prohibit any individuals from operating or promoting any online sweepstakes that replicate casino games, lottery games, bingo, or sports betting, and which offer a “dual-currency method of payment” that enables players to swap sweepstakes coins for cash prizes.
In addition, the bill would also ban content suppliers, platform providers, marketing affiliates, financial institutions, investors, payment processors, or geolocation service providers from supporting illegal online sweepstakes games.
The fate of a similar proposed ban in California is in the hands of the Senate Appropriations Committee, which voted 7-0 on Monday (August 18) to place Assembly Bill 831 on the suspense file, where committees hold bills with potential state costs for further review.
The Assembly passed an earlier version of AB831 without the sweepstakes language via a 77-0 vote on May 5. A September 12 deadline looms as that is the last day for each chamber in the California legislature to pass bills.
What Comes Next?
Online sweepstakes casinos are at a crossroads, as these websites face a continued onslaught of state bans, cease-and-desist letters, and consumer lawsuits in an effort to prohibit them from operating in some states. As opposed to traditional commercial and tribal gaming operations, which has been highly regulated, sweepstakes operate in a gray area in most of the U.S.
In this current regulatory environment, operators and trade associations are expected to protect their businesses as more states are likely to introduce legislation in 2026 targeting sweepstakes, following in the footsteps of New Jersey, Montana, Connecticut and Nevada.
Those legislative efforts are also expected to continue to target suppliers to online sweepstakes, including payment processors, cloud hosting services, affiliates and influencers, as per the bills in New York and California.
The Social Gaming Leadership Alliance (SGLA) and the Social and Promotional Games Association (SPGA), trade associations for the sweepstakes industry, strongly oppose any characterization that online social games which utilized sweepstakes promotions are illegal.
“This is not gambling; it’s marketing,” said Jeff Duncan, executive director of SGLA.
See also: U.S. Regulatory Review: Sweepstakes
