The legal landscape for online gaming is shifting rapidly. In 2025, multiple U.S. states launched aggressive crackdowns on sweepstakes-style casinos, a gray area of the industry that has long operated outside the boundaries of traditional gaming law. From cease-and-desist orders to outright criminalization, regulators are making it clear that unregulated gaming models will not be tolerated.
For operators, this surge in sweepstakes casino regulation presents not just legal risks but also serious cybersecurity and reputational challenges. With regulators, tribal leaders, and players all watching closely, casinos and iGaming companies must rethink compliance strategies before it’s too late.
Crackdown on Sweepstakes Casinos: State Actions in 2025
Across the country, regulators and lawmakers have sharpened their focus on sweepstakes platforms:
- Connecticut, Delaware, Maryland, Michigan issued cease-and-desist orders to operators running unlicensed sweepstakes casinos.
- Montana, Connecticut, New Jersey, and Louisiana passed laws criminalizing sweepstakes-style gaming, closing loopholes that previously allowed them to flourish.
- In New York, the Attorney General sent cease-and-desist letters to 26 online casinos, arguing that virtual coins redeemable for cash constitute illegal gambling.
- California’s AB 831, which sought to ban sweepstakes casinos, stalled after strong pushback from tribal nations, underscoring the jurisdictional complexity of this issue.
This wave of enforcement signals the beginning of a broader shift: sweepstakes casinos are no longer operating under the radar—they’re now in the crosshairs of regulators.
Risks Beyond Legal: Security & Reputational Hazards
While the legal risks are obvious, the cybersecurity risks are just as pressing. Sweepstakes platforms often:
- Rely on weaker KYC and AML protocols, making them prime targets for fraud and money laundering.
- Use inadequate data protection, leaving player information vulnerable to theft or misuse.
- Operate with unverified third-party vendors, creating supply chain risks.
- Lean heavily on affiliate marketing and influencer advertising, exposing them to compliance gaps and reputational fallout if ads target underage or vulnerable audiences.
For operators, ignoring these risks means exposing themselves not only to fines and shutdowns but also to potentially catastrophic cyber incidents.
Compliance-Driven & Secure Strategy for Sweepstakes Platforms
To adapt, operators must build strategies that prioritize both compliance and cybersecurity. Key steps include:
1. Regulatory Alignment
Conduct comprehensive audits of sweepstakes-style offerings to ensure they comply with new state laws. Engage proactively with state Attorneys General and gaming boards.
2. Stronger Security Controls
Implement advanced KYC, geolocation filtering, and transaction monitoring. Adopt frameworks like Zero Trust to secure networks and reduce fraud risk.
3. Advertising Compliance
Review affiliate and influencer content for potential violations. Embed disclaimers, restrict targeting of minors, and maintain documented compliance checks.
4. Legal & Tribal Engagement
Respect tribal sovereignty and consult legal experts to navigate conflicts between state legislation and tribal gaming rights.
5. Incident Readiness
Prepare for investigations or breaches with detailed activity logs, robust incident response protocols, and legal representation at the ready.
Policy & Cybersecurity Trends to Watch
Looking ahead, operators should anticipate:
- More state-level legislation targeting sweepstakes casinos, potentially creating a patchwork of restrictions similar to sports betting regulation.
- Federal scrutiny of online promotions and offshore platforms, particularly around payment processing and consumer protections.
- Rising cyber threats: as sweepstakes platforms attract greater attention, they may become more attractive to ransomware groups and fraud rings. Proactive security measures such as MDR (Managed Detection & Response) and third-party vendor assessments will be essential.
Conclusion
The era of unregulated sweepstakes casinos is coming to an end. States across the U.S. are sending a clear message: compliance and player protection cannot be optional. But the risk is not just legal—without robust cybersecurity, platforms will remain vulnerable to fraud, attacks, and reputational damage.
Now is the time for operators to get ahead of the curve. Sweepstakes casino regulation is tightening, and those who embrace compliance and security today will be the ones who thrive tomorrow.
Contact The Saturn Partners to secure your platform, navigate the evolving regulatory landscape, and build lasting trust with your players.