While the debate of businesses exploiting loopholes to offer casino-style gaming under the sweepstakes model is heating up, state agencies have long since found a company to make an example out of.

VGW Receives the Most Attention From State Agencies and Media

Only last month, on September 16, Virtual Gaming Worlds (VGW Holdings Limited), responsible for Chumba Casino, amended their terms of use to limit players from Connecticut from using the platform. This change was made to comply with a cease-and-desist order from the Connecticut Department of Consumer Protection (DCP) issued in February.

This wasn’t the first time VGW received a cease-and-desist letter in the mail. The company has faced regulatory scrutiny for years and stands out among sweepstakes operators as a scapegoat. They’ve been hit with several cease-and-desist orders and class-action lawsuits in different states:

  • Connecticut
  • Delaware
  • Georgia
  • Kentucky
  • Michigan

State agencies' focus is mainly due to VGW’s history as a leader in the sweepstakes casino industry.

Australian VGW is a Leading Sweepstakes Casino Business in the US

VGW, with its brands Chumba Casino, Luckyland Slots, and Global Poker, previously had a near-monopoly in the United States. As research conducted by Eilers & Krejcik suggests, VGW used to have a 90% market share in the US in 2020, which has shrunk to around 50% in 2024. Meanwhile, the sweepstakes market size has grown considerably over the past five years. Despite VGW’s smaller market size, the company reached unicorn status in 2023 when it managed a market cap of $1 billion with around $580m in EBITDA and $376m in profit after tax in FY23. It’s an Australian public company and one of the largest unlisted companies in the country. If VGW was publicly traded, it could have a market valuation of $3-5 billion when considering that iGaming companies typically trade at 4-8x EBITDA margin.

With all other available operators (70+), sweepstakes casinos have become a multi-billion dollar market in the US, operating without much legal oversight or generating tax revenue for states.

In other words, it’s no wonder state agencies and iGaming organizations are targeting sweepstakes operators, with VGW as the main target.

As indicated by Chumba Casino’s terms of use, the brand is unavailable to Connecticut, Idaho, Michigan, Montana, and Washington residents. What’s noteworthy is that VGW was served a cease-and-desist letter by The Delaware Division of Gaming Enforcement (DGE) in February 2023 and is still available in the state, but DGW will likely block players from Delaware soon.

Chumba Terms and Conditions relating to availability of services following legal actions
Chumba Casino Terms and Conditions: eligible states are highlighted.

VGW Holdings Limited and its subsidiaries (VGW Luckyland Inc., VGW GP Limited and VGW Malta Limited) also face a class-action lawsuit for operating and marketing online gambling websites in Georgia, where online casinos are illegal. According to the complaint, VGW attempts to “camouflage” its illegal operations by misrepresenting the platforms as “social casinos” offering “sweepstakes promotions” where the sum of its operations are gambling services, which is prohibited under Georgia law.

In a similar case from 2022, a Kentucky resident filed a class-action lawsuit against VGW Malta Ltd. for violating Kentucky gambling laws. The lawsuit ended in a $11.75 million settlement, and VGW withdrew from Kentucky. The legal actions taken against VGW have served as a warning to other operators, and most sweepstakes casinos in the US are blocking players from Connecticut, Delaware, and Kentucky.

Despite a Trade Body, Regulatory Pressure Is Likely To Increase

The Kentucky settlement also resulted in VGW implementing responsible gambling features, including a self-exclusion option to improve player safety. This was a step in the right direction. However, sweepstakes casinos in the US have little to no legal oversight, which leaves players vulnerable to exploitation.

Responsible gambling, or the lack of it, is one of the main criticisms of sweepstakes casinos. While the criticism is often warranted, as evidenced by some of JustGamblers’ testing, some operators have RG practices in line with regulated online casinos. However, looking at the industry, there’s a vast discrepancy compared to real online casinos. To address this issue, leading sweepstakes gaming businesses launched their own trade body last month, The Social and Promotional Gaming Association (SPGA).

Beyond improving responsible gambling conditions, the SPGA will create guidelines for transparency, fairness, and accountability among its members and influence the broader sweepstakes industry to improve business practices. Ten leading companies are among the founding members, and VGW Holdings Limited is not listed as an SPGA member:

  • 10 Ten Gaming
  • Blazesoft
  • Fliff
  • FSG Digital
  • Gold Coin Group
  • High 5 Entertainment
  • KHK Games
  • Kickr Games
  • Octacom
  • Rolling Riches
  • Woopla Gaming

The SPGA is a step in the right direction but is unlikely to change the direction of state agencies or silence media critics. The regulatory pressure is real, and it is going to continue. States that have already issued cease-and-desist orders and have high-profile class-action lawsuits will likely follow Michigan in banning sweepstakes casinos altogether.

More state agencies like the Michigan Gaming Control Board and the Delaware Gaming Enforcement are likely to pursue sweepstakes operators in the future, considering how they cannibalize online casinos where gambling is legally available and provide casino-style gaming in places where it’s illegal while contributing no state taxes. Virtual Gaming Worlds will remain a primary target as the legal loophole shrinks.