Question: How Can Sweepstakes Sportsbooks Be Legal?

Today, we delve into the world of sweepstakes sportsbooks.

You've probably seen their close cousins, the sweepstakes (or social) casinos within every single commercial block on television in between all those Skyrizi and Wegovy advertisements.  Throw in a few DraftKings ads of course.

The sweepstakes sportsbooks like Fliff are less common but work pretty much the same as a Chumba Casino or Pulsz Casino.  Instead of depositing funds as you would with a real money online sportsbook, you will purchase virtual gold coins in order to win real money "prizes".

Those companies operating off such a model insist it is legal as it does not require real money wagering.  Tell that to the Michigan Gambling Commission, which last year chased all of these "legal" sweepstakes gambling companies out of the state.

A popular figure in the world of sports betting, Joey Knish, posed the question: "How can sweepstakes sportsbooks be legal in the US?"

"Somebody explain this to me like I’m 5.  How are sweepstakes books legally operating? And why would any business strive to become a legal book ever again?

"They can market to minors, no gaming commission, no regulation, can apparently pay out whenever you feel like it."

Somebody explain this to me like I’m 5.

How are sweepstakes books legally operating? And why would any business strive to become a legal book ever again?

They can market to minors, no gaming commission, no regulation, can apparently pay out whenever you feel like it.

— Joey Knish (@JoeyKnish22) January 7, 2025

Knish makes an excellent point about marketing to minors as all of these social casino commercials remind us a whole lot of the old Camel Cigarette marketing campaigns.  Sure, we're aging ourselves a bit here with Joe Camel, but Google it.

This morning a commercial for MonopolyGo popped up and looked cooler than anything you'd see during Saturday morning cartoons.  And the best part is you don't have to wait until Saturday morning to enjoy.

Knish offered more.

"No gambling license. Every one of these has basically just turned into crack for 18-21 college kids.

"Like if I’m starting a book right now it’s Knishy Stakes with 1k/month withdrawal limits, the worst odds imaginable, and the scummiest rollover and free play tactics ever."

Last week, Gambling911.com published an article entitled "9 Reasons Why Sweepstakes Casinos Are So Popular With Millennials" and the article received the most impressions of any online for that day.  Impressions means Gambling911 appeared among search inquiries, likely with a few dozen other articles promoting the same concept.  Knish is right.  Social casinos are the "crack cocaine" of today's gambling.

"I just assume they are illegal and will be shut down at some point," one of Knish's followers commented.  Again, think Michigan gambling regulators.

MikeRAS writes:

"It's insane.  If sweepstakes books are truly "legal" we didnt need PASPA to be overturned.   I don't fault them for operating until the feds or states wake up and end it but the idea theyve somehow threaded a loophole is a joke.  (Spoken as someone with no legal background or in depth understanding of sweepstakes law)."

Though we explain how the sweepstakes sportsbook and social casino concept works above, Eddie Zamites does a better job of it. 

"You deposit cash to buy coins. You then bet coins or tokens instead of real cash. You can then redeem the coins for cash when you want to withdraw

"Its basically Chuckee Cheese for sports betting and if Chuckee cheese allowed you to redeem your tickets for $$."

One of the true ironies of the whole sweepstakes gambling site model is that a few of the bigger players come to us via Australia (Chumba is one of them).  This is a country that now blocks unlicensed online gambling sites from targeting those in Australia.  It's interesting to note that, for those of us following the world of offshore sports betting, Australia was among the pioneers in offshore sports betting.  With Canbet, Centrebet and a few others, they were in the game even before Costa Rica.

Jawn Wick writes of the sweepstakes sports betting model:

"This has also been mind boggling to me ever since I’ve heard of books like Fliff. My assumption is that it’s just a loophole through current regs. Like how you can’t drink in Lynchburg Tennessee where Jack Daniels is made BUT you can buy tokens there to exchange for whiskey."

But it's just a matter of time perhaps before many of these sites become extinct.

Red Rooster writes:

"They are getting banned by the month in different states. They've been awesome- you can play for free and simply send envelopes to get free money to play. I was earning thousands a month for years that way until my state banned most sweepstakes sites."

For now there are only around a half dozen "prohibited" states found on the vast majority of these websites. Could 2025 be the year this is about to change and more states come after the sweepstakes gambling model?  We shall see.