Sweepstakes casinos are finally catching a break in the US.

The past couple of years have seen an incredible crackdown on this new type of online casino throughout the US, including bans from New York, California, Montana, and other states.

Indiana also recently became the first state in 2026 to ban sweepstakes casinos, but it appears as though the bans are starting to slow down as regulatory heat shifts to prediction market sites instead.

The rapid rise in popularity of prediction markets, including Kalshi and Polymarket, has caused a storm in the US, allowing people to wager on practically anything they like online, from a Taylor Swift pregnancy announcement to who the next president will be.

Kalshi alone controls 89% of the US prediction market share and boasts over 5.1 million active monthly users, so this has led to regulators turning their attention away from sweepstakes casinos in an attempt to get a hold of what’s now become the fastest-growing betting vertical in the entire country.

How sweepstakes casinos and prediction markets have taken over

• Sweepstakes casinos are projected to generate around $3.6 billion in revenue during 2026, with WOW Vegas and Chumba Casino boasting over a million registered players
• Polymarket and Kalshi dominate US prediction markets with a combined trading volume of $60 billion so far this year
• Prediction market volumes will hit $1 trillion by 2030, according to investment bank Bernstein 

As far back as the COVID-19 lockdowns, sweepstakes casinos have been booming in the US.

The likes of Chumba Casino and Stake.us, as well as the many new sweepstakes casinos that keep hitting the market, follow a freemium model where players can play thousands of casino-style games for free using Gold Coins instead of actual money.

At the same time, they can also bet virtual Sweeps Coins and bag prizes like gift cards and cash transfers, which is why countless players are now hooked on the sweepstakes casino prize-winning model.

Then there are prediction market sites, which have exploded since around 2024 and are now seen as the hottest betting commodity in the US.

Unlike traditional betting sites, prediction markets function like financial markets, where users trade ‘contracts’ based on the probability of real-world events occurring, from what the weather will be like in New York on a specific day to how many tweets Elon Musk will send out this month.

Users can effectively bet on anything they like at any time without it feeling like they’re taking part in traditional gambling, and the fact they can bet on all types of novel and unconventional markets makes it all the more appealing.

As it stands, Kalshi and Polymarket have become so popular in the prediction market space that it’s even predicted that market volumes for the industry will surpass a trillion dollars by 2030, an unbelievable level of growth when you consider that prediction betting wasn’t even well known just a few years ago.

Sweepstakes casino bans slow as prediction markets attract legal problems 

Following the recent rise of prediction markets in the US, the onslaught of state bans against sweepstakes casinos has, at least for now, somewhat slowed down.

In 2025, almost every month a new state would pass legislation against sweepstakes casinos or make the attempt to do so, with concerns surrounding the dual-currency model adopted by these casinos continuing to grow.

So far this year, though, the bans have significantly slowed down, with Indiana the only state in 2026 to officially outlaw sweepstakes casinos.

One of the main reasons for this drop-off is that legal attention has shifted drastically towards prediction markets, which have skyrocketed so high in popularity that lawmakers have had no option but to take a look at the rapidly growing sector before it gets out of control.

The CFTC and state lawmakers have since started examining prediction markets more closely, with much of the controversy surrounding whether they should be classified as financial instruments under federal derivatives law or as gambling products regulated by states.

Currently, the CFTC claims it has full jurisdiction over prediction markets and has even filed lawsuits against New York and other states in its attempts to apply gambling laws against these prediction markets, which are currently CFTC-registered.

At the same time, there’s also a huge amount of concern surrounding insider trading across prediction markets, as it was only last month that a US Special Forces soldier placed a wager on the removal of Venezuelan leader Nicolas Maduro to bag himself $400k, leading to his swift arrest soon after.

It even surfaced back in March that the White House sent an internal email to staff members warning them not to use insider information to place bets on prediction markets, something the CFTC has also publicly warned about.

And with state regulators in eleven different states having issued cease-and-desist orders against prediction market operators over the past year, arguing that they cost states over $600 million in lost state sports betting revenue, the legal pressure looks set to persist for a while yet.

Most prediction market traders don’t actually make a profit 

Interestingly, sweepstakes casinos have garnered a positive reputation based on players being able to use free coins they receive to win prizes, whereas hardly any prediction market traders are making a profit.

Gen Z and Millennials, who are the fastest-growing users of these prediction market sites, aren’t winning as big as some believe, with many continuing to lose money across Polymarket and Kalshi.

The latest data from Bloomberg showed that 100,000 accounts have lost at least $1,000 on Polymarket, more than double the number of accounts that have won as much money.

Similarly, around 69% of accounts have lost money on Polymarket, while 70% of traders on Kalshi have been unprofitable over the past six months.

If the trend continues in this fashion, it will likely only lead to further legal scrutiny and crackdowns on prediction markets, as it’s economically unsustainable and there’s a growing need to protect financially vulnerable Americans.

What’s next for sweepstakes casinos and prediction markets?

While sweepstakes casinos enjoy temporary relief from recent legal trouble, prediction markets look set to face significantly more scrutiny over the coming months and potentially years.

Sites like Polymarket and Kalshi are going to keep expanding their user bases now that Gen Z and Millennials are hooked, but it’s safe to say that harsher regulations are almost a certainty at this point, although they may take a while to be implemented.

The sweepstakes casino market also looks set to steadily keep growing now that state bans have slowed down and casual gamers have started to discover these platforms.

Not to mention, sweepstakes casinos are also expanding to Australia and other world markets, which will also contribute to market growth.

Betting will likely never be the same again now that virtual sweepstakes casinos and fun prediction markets are here, and it will be interesting to see how it all unfolds as the state lawmakers get to grips with the changes.