New York Governor Signs Bill Banning Sweepstakes Casinos

New York has become the sixth US state to ban online sweepstakes casinos, following Governor Kathy Hochul’s signing of Senate Bill 5935 on December 5. 

The new law targets sweepstakes casino operators and companies that work with them, including payment processors, geolocation service providers, and media partners.

Individuals or companies found to be operating or facilitating online sweepstakes casinos can face fines of up to $100,000 per violation. Those who breach the rules may also lose an existing New York sports betting or gaming license or be barred from obtaining one in the future, such as if a market opens for NY online casinos.

The law also gives enforcement authority to the New York State Gaming Commission, the State Police, and the Attorney General.

Almost immediately after the bill was enacted, some sweepstakes-style platforms announced that they were withdrawing from the state. Users of products by companies, including Novig and ProphetX, posted that they were no longer able to access the services from within New York.

Sweepstakes casino operators have faced mounting scrutiny nationwide. California has already enacted its own ban, and several other states have issued cease-and-desist orders. 

New York has taken a particularly active role in recent months. In June, Attorney General Letitia James announced she had sent letters to more than two dozen operators, including Chumba and Fliff, directing them to halt operations. 

Although the Legislature passed the bill in June, it was not delivered to the governor until Dec. 1. Her signature aligned New York with other states opposing the dual-currency sweepstakes model.

Industry group calls for regulation, not prohibition

Ahead of the bill’s enactment, the Social Gaming Leadership Alliance, a sweepstakes industry group, released economic estimates that it claimed show that online social games featuring sweepstakes-style promotions contribute more than $230 million annually to New York’s economy. 

The figures, based on analysis by research firm Eilers & Krejcik, link this number to interchange fees, payment processing, and card network fees, as well as affiliation agreements and earnings tied to New York-based industry jobs.

According to the SGLA’s modeling, a regulatory framework, rather than a ban, could generate more than $80 million in annual state revenue through registration fees, taxes on player purchases, and potential gains from advertising and partnerships. The group has advocated for a system that includes age verification, data and financial protections, and responsible-gaming tools.

The SGLA also cited survey data indicating broad public support for regulating and taxing online social games, rather than prohibiting them. 

While the organization has expressed concern that the new law will reduce economic activity associated with the sector, state lawmakers and regulators have maintained that sweepstakes casinos operate outside New York’s authorized gambling framework and need stronger enforcement mechanisms.