Four States Move to Block Sweepstakes Casino Operators

2026 has not been a good year for sweepstakes casinos. Maine and Indiana passed their bans earlier this year, and California’s ban started on January 1st. Now, four more states are on the cusp of taking action against sweepstakes casinos.

Oklahoma and Tennessee legislatures have passed bills banning sweeps casinos, and the bills now await the Governor's approval. Louisiana passed a bill that makes sweepstakes casinos illegal gambling under racketeering laws. This bill is also awaiting Gubernatorial approval. Lastly, Iowa passed a bill that gives regulators enforcement powers against unlicensed operators, including sweepstakes casinos.

That’s not all, as a bill in Minnesota is still in play for 2026. The industry does not want to see these bills pass, as momentum is clearly building against the sweepstakes casino industry.

Operators Exits Following Tennessee Ban Passage

The Tennessee legislature passed SB 2136 on April 30th and sent it to Gov. Bill Lee. He has until May 12th to sign the bill, or it will become law automatically. Even if he vetoes, many believe the legislature holds the two-thirds majority to overturn a veto.

However, operators are already pulling out of the state in anticipation of his signature. ClubWPT Gold and A1 Development (FunzCity, NoLimitCoins, Storm Rush) have already exited the state. After the bill’s passage, all other operators must withdraw by July 1 or face civil penalties.

Oklahoma Ban Targets More Than Platforms

SB 1589 passed the Oklahoma House by a 65-21 vote on May 5 and now awaits action from Gov. Kevin Stitt. The Senate unanimously passed the bill in March. The governor has until May 12 to sign or veto the bill. If he does not act, the bill becomes law automatically.

This bill targets the dual currency model that sweepstakes casinos offer, including “any and all currency used as part of a dual-currency system of payment that allows a person to exchange such currency for any prize, award, cash, or cash equivalent.”

The bill does more than target casino operators. It also targets gaming providers, geolocation providers, promoters, and even affiliates. Authorities will classify violations as Class 2 felonies, with penalties of up to $2,000 per violation and potential jail time up to 30 days.

Iowa to Give Regulators Enforcement Powers Against Sweepstakes Casinos

The Iowa legislature has passed a bill to give enforcement powers to the Iowa Racing and Gaming Commission (IRGC). The Senate unanimously passed SB 2289 on May 5th during an extended legislative session, and it now sits with Gov. Kim Reynolds for a decision.

Once passed, the bill gives the IRGC enforcement powers against any form of gambling without a license. This includes all forms of casino gambling and sports betting, including sweepstakes casinos. While the bill does not outright ban sweepstakes casinos, the IRGC can send a cease-and-desist order and file court injunctions against operators.

While Gov. Reynolds has not spoken about the bill, it is virtually guaranteed to pass. The Senate unanimously passed the bill in February, as did the House in April. Lawmakers sent an amended version back to the Senate, which again unanimously approved it last week. Should Gov. Reynolds veto the measure, lawmakers certainly have the votes to overturn it.

Louisiana Looks to Severely Punish Sweepstakes Operators

Louisiana tried to ban sweepstakes casinos in 2025, but Gov. Jeff Landry vetoed the bill. This time, lawmakers are taking a different approach. HB 53 aims to classify sweepstakes casino gambling as illegal under state racketeering laws.

The measure recently passed the state legislature and now awaits Gov. Landry's action. If it passes, the law will not ban sweepstakes casinos outright. Instead, authorities could prosecute them under existing racketeering laws, the same laws used to prosecute organized crime. 

Those who violate racketeering laws could face fines of up to $1 million and prison sentences of up to 50 years. Furthermore, violations of $10,000 or more carry a five-year minimum sentence. These penalties are harsher than most other racketeering laws in America.

Of the four bills that have passed, only this one could face a veto. Gov. Landry vetoed a ban on sweepstakes casinos last year, stating that existing laws already prohibit them. Lawmakers did not overturn that veto, and it is unclear if they have the votes to do so this year.

Minnesota Ban Still in Play

Minnesota is also considering a ban on the sweepstakes casino industry. The MN Senate passed SF 4474 on April 30, and the bill now sits in the House Public Safety, Finance, and Policy committee. 

If passed, the bill will ban any site that uses a dual-currency system to simulate traditional gambling. Like Oklahoma, the ban will also extend to all businesses supporting the sweepstakes infrastructure, including payment processors and affiliates. 

Time is running out on this measure, as the legislative session ends on May 18. However, other states have expedited this type of legislation, so it would not be shocking to see the same happen here.

Not the Momentum the Sweepstakes Industry Wants to See

A month ago, it seemed the sweepstakes casino industry would emerge from 2026 relatively unscathed. Since then, the total number of states taking action against the industry has jumped to six, with other states waiting in the wings for 2027.

Based on stalled or failed actions in 2026, at least seven states and Washington, D.C., will likely pursue bills in 2027. At this rate, up to half of the US states could block or severely regulate sweepstakes casinos by 2028. 

This negative momentum should concern everyone, not just those in at-risk states. If the market continues to shrink, legitimate providers will start to shut down nationwide. If over half the country becomes inaccessible, then many legitimate sites will not be able to remain profitable. 

For those who play at sweepstakes casinos in at-risk states, I urge you to pay close attention and be ready to pull funds at a moment's notice. While this isn’t the end for sweepstakes casinos, we can consider recent developments a strong mayday signal.