USASweepstakes Casino Laws in the United States
Learn about sweepstakes casino laws and how you can play legally and redeem prizes on sweepstakes sites in different states.
Legal Overview of Sweepstakes Casinos in the US
There are no specific regulations for sweepstakes casinos in the United States, and operators utilize a loophole in federal laws to legally offer casino-style gaming to American players where “no purchase is necessary”(1).
This means sweepstakes sites are available in most states except for Washington and Michigan. These are currently the only two states that explicitly ban companies operating under the sweepstakes model outlined below:
| Sweepstakes Casinos | Online Casino |
|---|---|
| No license is needed. | License required. |
| Free virtual currencies are rewarded with minimal effort required from the player. | A real money deposit is required. |
| Optional purchase is available. | Real money used for playing. |
| Virtual currencies are used for playing. | Real money can be won. |
| Virtual currencies are won and not real money. | Real money can be withdrawn. |
| Virtual currency can be used for redeeming prizes at a one-to-one dollar value. |
Through these mechanics, sweepstakes casinos are not considered gambling and don’t fall under the laws and regulations that real money online casinos are subject to. The same is true for sports betting sites that operate under the sweepstakes model.
“In preparation for writing this page, I have thoroughly read, analyzed, and understood gambling laws, statutes, and regulations to provide information about the legal landscape for sweepstakes casinos in the US (see sources at the bottom). This includes the specific considerations of states like Idaho, Michigan, Nevada, and Washington. At the same time, I want to clarify that I am no legal expert, and the information provided at JustGamblers.com shouldn’t be considered legal advice. If you require legal assistance, seek professional advice locally in your state.”
Patrik Lidin, Sweepstakes Casino Expert
Are Sweepstakes Casinos Legal in the United States?
Yes, sweepstakes casinos are currently legal in 48 states. Michigan and Washington are the only states that have passed legislation prohibiting sweepstake companies from operating. Additionally, Idaho has laws that don’t allow sweepstakes redemptions, which render sweepstakes casinos useless since players can play and win virtual currencies but not redeem prizes for virtual currencies.
Many sweepstakes operators have withdrawn from Delaware, Kentucky, Nevada, New York, and Wyoming due to complex legal regulations and potential future restrictions.
Legal Age Requirements for Sweepstakes Casinos
The legal age requirement for playing at sweepstakes casinos in the US aligns with federal sweepstakes laws, meaning players 18 or over can register and play.
However, there are sweepstakes sites that have opted for a minimum age requirement of 21.
How Are Sweepstakes Casinos Legal Where Online Casinos Are Illegal?
Sweepstakes casinos are legal in most states where real-money gambling is illegal because they operate under the sweepstakes model, which does not require cash transactions for participation. You can transact cash when purchasing virtual coin packages, but that’s optional and not a requirement. You’ll have the same access and chances of winning by registering and claiming some free virtual currency to play with.
From a legal perspective, it boils down to how US law defines illegal gambling; there are three elements(2):
- Consideration: cash purchase or an extensive effort needed to participate.
- Prize: winners are awarded anything of tangible value.
- Chance: winners are determined by chance.
Sweepstakes casinos' free-to-play access and use of gold coins (virtual currency) eliminates consideration. This is what makes sweepstakes “no purchase necessary.”
Also, winners must be required to pay taxes on prizes they win.
Additionally, most sweepstakes casinos leverage Alternative Method of Entry (AMOE)(3), allowing players to participate in sweepstakes casinos (win virtual currency) through social media contests and completing tasks with minimal effort, like filling out a form or simply redeeming a daily reward and receiving free virtual currency.
Here are the three possible combinations of consideration, prize, and chance:
- Consideration + Prize + Chance = illegal gambling.
- Consideration + Prize = legal contest (in most states).
- Prize + Chance = legal sweepstakes.
Real-money online casinos, on the other hand, require cash purchases. Winners are determined by chance and are awarded cash when they win. This is why real-money online casinos are illegal in most states, while sweepstakes casinos are allowed to operate.
| Type | Require Cash Transaction | Win Prizes | Win Real Money |
|---|---|---|---|
| Sweepstakes Casinos | ❌ No | ✅ Yes | ❌ No |
| Online Casinos | ✅ Yes | ❌ No | ✅ Yes |
Can You Legally Redeem Cash Prizes in US Sweepstakes Sites?
It’s possible to redeem cash prizes in all states where sweepstakes casinos are legally available except for Idaho, which has specific regulations that make it illegal to redeem cash prizes.
Different State Laws for Sweepstakes Casinos
How State Laws Impact Sweepstakes Casinos in Idaho
While sweepstakes casinos are legal in Idaho, legislators have banned prize redemptions, removing the incentive of playing since it’s impossible to win anything of tangible value.
As specified in Title 18 Crimes and Punishments Chapter 38 in Idaho legislature(4), gambling is defined as risking any money, credit, deposit, or other thing of value for gain in whole or in part. Prize redemptions fall under this provision, which means that sweepstakes casinos that allow prize redemptions are classified as gambling websites.
Consequently, very few sweepstakes casinos operate in Idaho to prevent potential legal complications.
How State Laws Impact Sweepstakes Casinos in Michigan
Michigan lawmakers have decided that sweepstakes casinos constitute illegal gambling and have served several operators with cease and desist orders.
The Michigan Penal Code (MPC) broadly prohibits any kind of gambling involving consideration, prize, and chance(5). While there is a limited exception for promotional sweepstakes activity, Michigan lawmakers have decided that sweepstakes casinos constitute illegal gambling.
Since 2023, the Michigan Gambling Control Board (MGCB) has served several sweepstakes operators with cease and desist orders(6) and continues to actively combat out-of-state sweepstakes sites(7). In these cease and desist letters, the MGCB that sweepstakes casino are in breach of both local state laws and the federal Lawful Internet Government Act of 2019(8).
Instead, Michigan has a legal framework that allows licensed online sportsbooks and real-money casinos to operate.
How State Laws Impact Sweepstakes Casinos in Washington
Washington classifies sweepstakes as a form of gambling(9), meaning that activities relating to sweepstakes casinos involve knowingly transmitting or receiving gambling information by telephone, internet, or other similar means. According to the law, that’s a class C felony. This is not limited to sweepstakes; all forms of online sports betting and casino gaming are illegal in Washington, as specified in Chapter 9.46 of the Revised Code of Washington (RCW)(10).
How State Laws Impact Sweepstakes Casinos in Nevada
Sweepstakes casinos are not defined in Nevada state laws or explicitly subject to regulations from the Nevada Gaming Commission and the Nevada Gaming Control Board, making them legal in Nevada. However, many of the top operators don’t accept players from Nevada.
Some sweepstake operators have opted to block Nevada players because of provisions in Chapter 465 of the Nevada Revised Statute (NRS)(11), similar to the Michigan Penal Code, where the state actively pursues violators with cease and desist orders. Chapter 465 mentions the following, which may implicate sweepstakes operators:
- NRS 465.086: Unlawful receipt of compensation for accepting bets or wagers upon the result of certain events without required gaming licenses. Specifically concerning “...unlawful for a person to receive, directly or indirectly, any compensation or reward…” and “...Transmit or deliver anything of value resulting from a bet or wager…”
When found guilty, offenders, depending on the severity, are subject to punishment for category C or B felonies, according to NRS 193.130(12).
Federal Regulations and Legal Considerations for Sweepstakes Casinos
Sweepstakes are regulated nationally by the following organizations that oversee advertising and promotional activities, ensuring that sweepstakes are operated relatively and transparently:
- Federal Trade Commission (FTC)
- Federal Communications Commission (FCC)
- United States Postal Service (USPS)
- United States Department of Justice (DOJ)
Several federal laws may impact sweepstakes casinos:
- Lawful Internet Gaming Act: Mandates that internet gaming can only be provided by licensed internet gaming operators. Only casinos licensed under local state frameworks, as well as federally recognized tribal casinos in different states, are eligible to apply for an internet gaming operator license and offer gambling services online.
- Unlawful Internet Gambling Enforcement Act (UIGEA): Passed in 2006, this law makes it illegal for gambling businesses to process payments tied to unlawful online gambling activities knowingly. However, it provides exceptions for certain activities, such as online sweepstakes(13).
- The Wire Act of 1961: forbids certain gambling businesses from using wire communications to facilitate bets across state lines. While it primarily focuses on sports betting, it has broader implications for online gambling(14).
Additionally, on a federal level, operations of sweepstakes casinos can be impacted by guidelines and regulations:
- Operational Guidelines: Federal regulations establish a foundational framework for operating sweepstakes casinos, especially regarding payment processing and promotional activities.
- Regulatory Oversight: Federal regulations ensure that sweepstakes casinos operate transparently and fairly, safeguarding consumers against misleading practices.
- Compliance Costs: Compliance with federal and state regulations can raise compliance costs for sweepstakes casinos. Operators must invest in legal expertise to navigate the intricate regulatory environment and maintain ongoing compliance.
Know Your Customer Processes in Sweepstakes Casinos
All sweepstakes casinos in the United States have KYC (Know Your Customer) processes at either purchases or redemptions. KYC is a process of identifying and verifying the client’s (your) identity.
KYC checks are done to establish player identity to:
- Prevent money laundering.
- Prevent fraud.
- Counter underage gaming.
- Practice responsible gaming.
- Establish trust and credibility.
- And often regulatory compliance.
In sweepstakes casinos, since no iGaming licenses are required, KYC is related to the minimum age requirement of 18 since minors must be shielded from accessing gambling content. This is in line with sweepstakes promotional laws relating to tobacco and alcohol, where persons must be the age of majority (when a person is a legal adult at 18).
In some jurisdictions, KYC may also be required under applicable laws and regulations related to payment processing (financial services). Regardless of the reason, all sweepstakes operators will have it stipulated in their terms and conditions that they are entitled to conduct a KYC check (including credit background checks and identity checks).
FAQ About Sweepstakes Casino Laws in the US
Sweepstakes casinos are legal in AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WV, WI, WY. Michigan and Washington state are the only states where sweepstakes casinos are illegal. Additionally, Idaho and Nevada have provisions in their laws that make it difficult for sweepstakes casinos to operate, which means that many operators don’t accept players from these states.
In all states except Idaho, Michigan, and Washington, you can legally redeem sweepstakes coins for gift and cash prizes.
Resources & Sources
- No purchase or payment is required to win, accessed on September 18, 2024, <https://www.ftc.gov/business-guidance/resources/advertising-faqs-guide-small-business>
- An Introduction to the Law of Internet Gambling, accessed September 16, 2024, <https://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1146&context=grrj>
- What is an AMOE?, accessed on September 16, 2024, <https://nationalsweepstakescompany.com/blog/what-is-an-amoe-alternate-method-of-entry/>
- Idaho gambling definition, accessed on September 20, 2024, <https://legislature.idaho.gov/wp-content/uploads/statutesrules/idstat/Title18/T18CH38.pdf>
- Bulletin on illegal gambling, accessed on September 20, 2024, <https://www.michigan.gov/mgcb/-/media/Project/Websites/mgcb/Home-Page-Resources/Bulletin_on_Illegal_Gaming_745572_7.pdf>
- MGCB sends cease and desist letters to PredictionStrike Inc., Sweepstakes Limited, VGW Luckyland Inc., accessed on September 22, 2022, <https://www.michigan.gov/mgcb/news/2024/01/18/mgcb-sends-cease-and-desist-letters>
- MGCB issues cease-and-desist letter to OC Media Holdings LLC, accessed on September 22, 2024, <https://www.michigan.gov/mgcb/news/2024/08/27/mgcb-issues-cease-and-desist-letter-to-one-country>
- LAWFUL INTERNET GAMING ACT Act 152 of 2019, accessed on September 22, 2024, <https://www.michigan.gov/mgcb/-/media/Project/Websites/mgcb/Internet-Gaming-and-Fantasy-Contests/ActsandRules/Lawful_Internet_Gaming_Act_PA_152_of_2019.pdf>
- Sweepstakes gambling classification, accessed on September 23, 2024, <https://wsgc.wa.gov/sweepstakes-faq>
- The illegal status of online gambling in Washington, accessed on September 23, 2024, <https://app.leg.wa.gov/RCW/default.aspx?cite=9.46.0237&pdf=true>
- Chapter 465 of NRS outlining legal complications of sweepstakes casinos, accessed on September 24, 2024, <https://www.leg.state.nv.us/nrs/nrs-465.html>
- Legal repercussions for companies and individuals found guilty of breaching provisions outlined in Chapter 465, accessed on September 24, 2024, <https://www.leg.state.nv.us/nrs/NRS-193.html#NRS193Sec130>
- Unlawful Internet Gambling Enforcement Act of 2006 Overview, accessed on September 18, 2024, <https://www.fdic.gov/sites/default/files/2024-03/fil10035a.pdf>
- Transmission of wagering information, accessed on September 18, 2024, <https://www.law.cornell.edu/uscode/text/18/1084>