Online Sweepstakes Casinos Fill Vacuum Created By Lack of iGaming Legislation Heading Into 2025

You've seen the ads all over television.  Online sweepstakes casino games are taking the USA by storm.

With only seven U.S. states legalizing real money online casinos, sweepslots casinos have found a way to fill in the void.  And they are doing it with reckless abandonment.

Let's explore this new phenomenon.

What Are Sweepstakes Casinos?

Sweepstakes casinos introduce a fresh approach by utilizing virtual currencies like Gold Coins and Sweeps Coins, allowing players to enjoy games without spending real money upfront. The "prize" concept allows these websites to stay within legal boundaries, though they are certainly flirting with a gray area, which we'll get to later.

In contrast, traditional casinos require players to wager real money directly.  Customers looking to play on real money online casinos, including live dealer casinos, will need to deposit money first.  This requires a credit card, crypto or the use of some alternative payment solutions.

Obviously the sweepstakes model will not work if folks keep playing for free.

Sweepstakes casinos generate revenue through the sale of Gold Coins, which are used for entertainment purposes.  Again, these sites insists this is all within the legal landscape.

Sweepstake operators argue the dual-currency format is allowed under sweepstakes law.

The Sector is Bigger Than You Might Think

From 2019 to 2022, the market logged an annual revenue growth rate of 89 percent, generating $3.1 billion in 2022 alone.  Those numbers are difficult to wrap one's head around.  Truly jaw dropping.  The United States owns the global market share at 91.4 percent.  Here, approximately 55 million participants engage with sweepstakes casinos and contests annually.

Not All States Willing to Embrace Sweepstakes Casinos

It's been a year since Michigan began telling these casinos to get lost.

Michigan Attorney General Dana Nessel specifically targeted Massachusetts based Golden Hearts Games, Inc.  But the writing was on the wall and most of the big players were quick to pull out.

The American Gaming Association was quick to flex their muscles in light of Michigan's stance.

Over the summer, the AGA released its new ominously named "Anti-Sweepstakes Casino" policy.

The trade group alleges, without offering proof, that sweepstake models fail to ensure protection and fair play for consumers.

“The lack of regulatory oversight presents many risks for consumers as well as the integrity and economic benefits of the legal gaming market through investment and tax contributions,” said the AGA in its policy statement. “These sweepstakes-based operators have weak (if any) responsible gaming protocols and few, if any, self-exclusion processes.”

Translation: Sweepstakes casinos are not paying state licensing fees. 

The irony here is that Las Vegas casinos are supposedly not lacking regulatory oversight yet we have the Resorts World Casino under an intensive money laundering probe.

It's not fair to say these companies aren't paying a tax if they're based in the USA.  Chumba Casino is headquartered out of Boulder, Colorado, so it is presumed they are paying their fair taxes in that state.  The question remains: Are they paying a set tax in all the states in which they operate?

Legislators are now proposing a 15% to 25% tax rate for new states adopting internet gambling.  It's doubtful these social casinos are paying anywhere near this tax rate.

What to Know About Sweepstakes Casinos Heading Into 2025

As we exit 2024, the sweepstakes casino industry is experiencing a surge in innovation with expanded game libraries and a stronger focus on delivering exceptional user experiences.

The industry received yet another boost recently when Google announced it would lift restrictions on sweepstakes casinos.

As of December 4, social casino game ads are now permitted to utilize personalized targeting, a capability expected to be extended to all advertisers by the end of March 2025.

Type in "Online Casino" into Google search and you're now flooded with sponsored ads for these sweepstakes casinos.