New York imposes prohibition on sweepstakes casinos and sportsbooks

Online sweepstakes casinos and sportsbooks face immediate compliance hurdles in New York following Gov. Kathy Hochul’s approval of S.B. 5935, which prohibits their operation and promotion and imposes fines reaching $100,000 per violation.

The law, signed Friday and already in force, targets platforms using “dual currency” models for casino-style play and sports prediction. It also restricts a range of support services tied to sweepstakes gambling, including financial institutions, geolocation providers, and media affiliates.

Under the statute, violations can result in penalties of $10,000 to $100,000 per offense. Entities found in violation could also lose eligibility to obtain or retain a gaming license in the state.

Shortly after the signing, New York-based users of prediction platforms Novig and ProphetX reported that access to their accounts had been blocked. Operators of sweepstakes products have been under increasing scrutiny in multiple jurisdictions over the past year.

Licensed online sports betting in New York remains operational, though only when conducted through approved operators under the state’s regulatory system.

New York officials had previously moved against unauthorized wagering forms. New York Attorney General Letitia James said in June that more than two dozen sweepstakes platforms — including Chumba and Fliff — received cease-and-desist letters.

The state legislature passed S.B. 5935 in June. Delivery of the bill to Hochul occurred December 1, before the final signature placed the measure into effect Friday.

Other states, including California, have also passed legislation restricting sweepstakes operators. Regulatory agencies elsewhere have issued cease-and-desist notices in their jurisdictions.

“The guardrails and the safeguards that we painstakingly take efforts to do when we do mobile sports betting or iGaming are not there with most of these sweepstakes casino sites,” Democratic Sen. Joseph Addabbo Jr., the bill’s sponsor, said in an interview with Covers in March.