What are sweepstakes casinos?
Before we take an in-depth look at the legalities surrounding these types of gaming sites, let’s define these types of gaming sites.
To be clear, these sites are not real-money gambling sites. This means you don’t deposit cash, you don’t wager cash on casino games, and you don’t withdraw cash either. Instead, you use virtual currency to play the casino-style games on the site. The virtual currencies have no value outside of the gaming site, but some types of virtual currency are redeemable for real prizes, including cash.
Most of these sites offer two types of virtual currency:
Gold Coins
(GC) and Sweeps Coins (SC). The exact names for these currencies may differ among the gaming sites, but you’ll use them in the same way. You can use Gold Coins to play the casino-style games on the site for fun and entertainment. You can then switch to “Sweepstakes Mode” and play the games using your
Sweeps Coins. Playing in this mode gives you a chance to win redeemable SC. If you meet all the requirements, you can redeem any eligible SC for real prizes, such as cash and gift cards.
If this is all new to you, you may have just perked up like a prairie dog at the mention of redeeming real prizes. And you can see why this is such an attractive alternative to traditional casinos. Most of us in the United States can’t gamble at online casinos, so our only option was to schlep to a brick-and-mortar casino. However, now that sweepstakes casinos are legal in many places, players can enjoy casino-style games from the comfort of their home. (Hey, no one needs to know you’re gaming in your jammies.)
Now that you know
how sweepstakes casinos work, let’s take a look at where they are legal…
Where are sweepstakes casinos legal?
The answer to this keeps shifting as lawmakers debate the various bills being introduced all over the United States. In addition, while some states have outright banned these types of gaming sites, other states have employed restrictions that make it more difficult for sweepstakes casinos to operate legally. Some gaming sites only restrict players from the states with outright bans, while other sites restrict players from “murky” states and/or those in the process of legislating the issue. That’s why you’ll notice that some sweepstakes casinos restrict a large number of states, while others restrict a handful – it largely depends on how the operator feels about dealing with the legal ground shifting beneath their feet.
Since there are more legal states than restricted states, we put together a table that highlights states with outright bans, as well as those with partial restrictions, gray legal areas, or those states that have simply been hostile to sweeps casino operators:
| State
|
Status
|
Details
|
| California |
Banned |
AB 831 outlaws dual-currency sweepstakes |
| Connecticut |
Banned |
Regulatory environment resulted to market exit by major brands |
| Louisiana |
Banned |
Mass withdrawal of operators due to tough regulations |
| Michigan |
Banned |
Strict Gaming Control Board enforcement |
| Montana |
Banned |
Strict prohibitions |
| Nevada |
Banned |
Operators must have a license to offer sweepstakes |
| New Jersey |
Banned |
Mass exit of major operators |
| New York |
Banned |
Senate Bill 5935A officially banned operations |
| Washington |
Banned |
Bans all “dual-currency” sweepstakes |
| Alabama |
Allowed with restrictions |
Debating sweeps bills, sending cease and desist letters to sweeps casino operators |
| Delaware |
Allowed with restrictions |
Regulatory enforcement has resulted in casinos exiting the state |
| Florida |
Allowed with restrictions |
No prizes with a value above $5000 |
| Idaho |
Allowed with restrictions |
No cash prize |
| Kentucky |
Allowed |
Legal gray areas has caused voluntary exits |
| Maryland |
Allowed |
Enforcement has pushed operators out |
| Minnesota |
Allowed |
Debating legislation, nothing successful yet |
| Tennessee |
Allowed |
Sending cease and desist letters to operators – casinos are exiting the state |
| West Virginia |
Allowed |
Regulators are hostile towards sweeps casinos |
You can consider this a snapshot of what’s happening right now, as the laws are changing fast. Take note that many sweepstakes casinos restrict the aggressive and “gray area” states just to avoid the hassle. In other cases, residents from states like Florida or Idaho aren’t necessarily banned from playing at sweepstakes casinos, but they do have restrictions in place about the size and type of real prizes they can redeem.
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How do legal sweepstakes casinos remain in compliance?
As you might suspect, those who operate sweepstakes casinos employ a legal team just to stay on top of the shifting regulations. And while the laws vary by states, most sweeps casinos take the following steps to protect themselves, their businesses, and their players:
Utilize identity verification
If you’ve played at any of these gaming sites, then you’re well aware of
sweepstakes casino verification
processes. This is referred to as the Know Your Customer (KYC) identity verification process, and it requires players to upload their official identification, a selfie, and supporting documents such as a utility bill. This process is designed to verify that the person is old enough to play at the sweeps casino, and that they live in a state where sweepstakes casinos are legal. In addition, these checks help reduce money-laundering and other nefarious activities.
Use compliant language
Most of these gaming sites are very careful about the language they use on their website, in their marketing materials, and via their other communications. Notably, you won’t see them use words such as:
- Betting
- Wagering
- Gambling
- Casino games
- Vegas games
- Real money betting
- Deposit
- Withdraw
… And similar words that would suggest the brand is a traditional casino that operates using real money. Instead, you’ll see alternatives such as “casino style games” and “no-purchase bonuses.”
Enable geo-fencing
Another way that sweeps brands stay in compliance with the law is by using geo-fencing. This means that if someone visits the site from an IP located in a restricted jurisdiction, they may be blocked from the site entirely. In other cases, they may not be blocked, but they’re only allowed to play the games in “Standard Mode” using Gold Coins (with no chance to win any sweepstakes prizes).
Some of our savvy readers may be wondering about VPNs (virtual private networks), and how these gaming sites deal with people who use them. To back up for a moment, a VPN enables users to mask where they’re located. For example, they could be sitting dead-center in the state of Washington (a restricted state), but they might be using a VPN that shows them as being located in Hawaii. So they’re in, right?
Not quite.
In some cases, a sweeps site may be able to detect a VPN, so they’ll ask the visitor to turn it off before they can enter the site. In other cases, the casino can’t detect the masked IP. So, technically that may get an illegal player in the door, but the identity verification process will stop them in their tracks.
Ensure no purchase is required
Legal sweepstakes casinos use a dual-currency model as described earlier, where players can use Gold Coins and Sweeps Coins to play the games. These sites are very clear that a purchase is never required to enter the sweepstakes or play the games for fun. Instead, players can pick up free virtual currencies through welcome bonuses, login bonuses, free daily spins, free raffles, by requesting them in the mail, by referring their friends and more.
Now if you’ve played on these sites before, then you know that all sweepstakes casinos let you purchase Gold Coins. While these purchases are NOT required, many players happily take advantage of this option because it’s a quick and easy way to top off one’s virtual currency balances. When people purchase Gold Coins (which are the only game coins that people can purchase at a sweepstakes casino), they usually get Sweeps Coins as a free bonus.
Let’s take an example of how this works…
A sweepstakes casino might offer players 100,000 GC and 2 SC as a bonus just for signing up. Then players can collect small bonuses, such as login bonuses, social media giveaways, and similar. For example, they might get an extra 20,000 GC here or a 0.5 SC there. This keeps the casino compliant in that players can always play for free. Players generally purchase Gold Coins by the hundreds of thousands, and then they get a generous bonus of Sweeps Coins. For instance, a player might buy 500,000 GC and get 50 SC as a free bonus. The casino is compliant as long as they don’t require these purchases.
Another method for keeping sweepstakes casino legal is for the operator to be in compliance with tax laws. Specifically, if someone wins a prize worth more than $600, the sweepstakes casino is required by law to report the prize winning to the IRS. The casino usually does this using form 1099-MISC, which is different from the forms required if this was a real-money gambling casino.
Install player controls
There isn’t a federal law that requires player controls, but at the state level this can be a bit of a murky gray zone. As such, most sweepstakes casinos will provide player controls that enable players to take breaks or even self-exclude themselves from the gaming site entirely. Most gaming sites do this as part of the self-regulation that has evolved in the industry, to cover themselves legally since it is a gray area, and because they care about their players.
What about sweepstakes casino licensing?
You may have noticed the list of compliance measures makes no mention of casino licensing. The reason is because sweepstakes casinos aren’t licensed and regulated in the same way as online or offline real-money casinos. The Federal Trade Commission (FTC) is the primary regulatory body that oversees sweeps casinos, but the government primarily monitors the way the brand advertises itself. This of course comes back to the issue of casinos using compliant language. The regulatory bodies that oversee sweeps casinos may change as the laws change.
Pros and cons of playing games at legal sweepstakes casinos
Thinking about trying sweepstakes casinos? Here’s a quick look at the good and the not-so-good before you dive in:
Pros and Cons
- Great alternatives when online casinos aren’t legal in your area
- Offers generous welcome and ongoing bonuses to extend your playtime
- Eligible Sweeps Coins can be redeemed for real prizes such as cash or gift cards
- Sweepstakes casinos aren’t legal in every state or local jurisdiction
Final thoughts on legal sweepstakes casinos
As you now know, there are several states that outright ban sweepstakes casinos, while others enforce restrictions on the way the businesses operate. Many states that are hostile to sweeps casinos have state-licensed casinos that lobby hard against alternatives. As such, the regulatory landscape is evolving constantly, so what’s legal today may be illegal tomorrow – or vice versa!
If you live in a legal state and you’re interested in playing casino-style games, then click on any of the sweeps banners on this site. We’ve reviewed every site that’s listed on this page, so you can join with confidence, as these sites are compliant with the laws and regulations.
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Legal sweepstakes casinos FAQs
🎰 Are social casinos legal?
Yes, in most areas. While the terms social casino and sweepstakes casino are used interchangeably, they are two separate entities in the eyes of the law. Social casinos use just one virtual currency (Gold Coins), so people play for fun with no chance to win a prize. Sweeps casinos use two virtual currencies, which gives players the opportunity to play in sweepstakes mode.
✅ Which sweepstakes casinos do we recommend?
Perhaps you’ve found out that these gaming sites are legal in your jurisdiction, and now you’d like a
list of sweeps casinos
that offer good bonuses and plenty of casino-style games. Just click any of the banners on this page, as we only list compliant, reputable sweeps casinos on this site.
👮 What happens if you join today, but it becomes illegal in your state tomorrow?
Sweeps casinos are used to handling this situation, as it has happened before. If your state prohibits you from playing at a sweepstakes casino in the future, the operator will close your account and pay out any eligible redemptions.
