New York moves to ban sweepstakes casinos, bill now awaits Governor's signature

New York is poised to become the latest U.S. state to outlaw online sweepstakes casinos, as legislation targeting dual-currency gaming platforms now awaits the signature of Governor Kathy Hochul.

Senate Bill 5935 passed the state Senate on June 11 and cleared the Assembly on June 17 after procedural review, marking the final step before enactment. If signed into law, New York would join Montana and Connecticut in banning platforms that offer virtual “sweeps coins” redeemable for cash prizes.

The bill’s passage comes amid an escalating crackdown on unregulated online gambling platforms across the U.S. Earlier this month, New York Attorney General Letitia James announced that her office had issued cease-and-desist letters to 26 sweepstakes operators. Most of the targeted companies have since exited the state, including VGW — the parent of Chumba Casino, LuckyLand Slots, and Global Poker — which began a phased withdrawal in May.

“This bill doesn’t just target sweepstakes, it sends a chilling message to anyone looking to invest in the next generation of gaming innovation,” said a spokesperson for the Social and Promotional Games Association (SPGA), which is urging Hochul to veto the measure. “Nearly every form of online gaming we know today, including companies like FanDuel, a New York-based success story, began as pre-regulated concepts. This legislation criminalizes that innovation cycle.”

The bill includes provisions for potential criminal penalties against individuals or firms that invest in platforms offering any currency — digital or otherwise — that can be converted into cash or equivalents. Critics argue this could stifle innovation and discourage investment in the broader gaming and tech sectors.

Meanwhile, supporters of the bill point to enforcement actions in other states. In Connecticut, High5Games was hit with over 1,000 counts of illegal gaming activity, prompting a full suspension of operations.

“Reward programs like Starbucks don’t allow you to accumulate reward points and then cash them in for cash,” said Assemblymember Carrie Woerner, clarifying that traditional loyalty programs would not be affected by the ban.

Efforts to ban sweepstakes casinos have picked up across several states. Montana implemented its prohibition in May, while Connecticut followed in early June. However, not all states have followed suit — Louisiana Governor Jeff Landry vetoed a similar bill, calling it an unnecessary solution to a non-existent problem. In Maryland and Mississippi, comparable legislation stalled in committee.

Regulatory actions are also intensifying. On the same day the New York Assembly passed SB5935, Louisiana’s Gaming Control Board announced enforcement against 40 offshore and sweepstakes operators. Mississippi has issued cease-and-desist letters to multiple platforms, including Chumba Casino. In California, WOW Vegas now faces a class-action lawsuit alleging the company failed to register as a foreign corporation.