New York has officially moved to ban sweepstakes casinos after governor Kathy Hochul signed Senate Bill 5935 into law on Friday. The statute makes operating or promoting online sweepstakes games in the state illegal, a blow to the online sweepstakes industry that was worth over $2.5 billion according to a recent report by Eilers & Krejcik Gaming.
The bill passed the legislature in June but did not reach Governor Hochul’s desk until early December. Any entity caught in violation of the rules would face fines of up to $100,000 for each instance.
Several operators withdrew within hours of the bill being signed into law, with sweepstakes-style sports prediction markets Novig and ProphetX immediately announcing a closure to their services as a result of the bill.
Online sports betting sites remain legal, as long as services go through licensed providers. However, sweepstakes sports betting sites will also be unable to offer bets. The author of the bill, Democratic Senator Joseph Addabbo Jr of New York said in an interview with Covers in March: “The guardrails and the safeguards that we painstakingly take efforts to do when we do mobile sports betting or iGaming are not there with most of these sweepstakes casino sites.”
The decision comes after the New York State Gaming Facility Location Board approved the final three applications for three land-based casino sites in the Big Apple. The Bally’s Bronx, Hard Rock Metropolitan Park and Resorts World New York City have been referred to the Gaming Commission for licensure consideration.
Lobby group expresses dismay at bill passing
Responding to the bill passing, the Social Gaming Leadership Alliance (SGLA) said it was disappointed in the outcome. The group represents a cohort of social gaming and sweepstakes companies. Jeff Duncan, Executive Director of SGLA, said: “Players, operators, and voters all made their position clear: they didn’t want a ban on this popular, safe form of entertainment. Governor Hochul had the opportunity to protect consumer choice and New York’s economic interests. Instead, she chose a short-sighted path, closing the door on choice, innovation, and hundreds of millions in economic activity.”
In a statement, they said: “Public opinion is clear: regulate, don’t ban. Nationwide polling shows that 84% of Americans support updating laws to regulate and tax Social Plus games. Voters overwhelmingly want lawmakers to focus on urgent issues like inflation and the high cost of living, health care and immigration, not banning safe, free-to-play entertainment.” The group added they “remain committed to advocating for modern, balanced regulation that reflects voter preferences, protects consumers, supports local economies, and preserves access to safe Social Plus games.”
In a late push to persuade Hochum to veto the bill, the SGLA had launched a last-ditch grassroots campaign urging Governor Kathy Hochul to veto the bill. They had managed to garner 2,000 signatures to a petition, but it wasn’t enough.
A turning point for sweepstakes casinos and sportsbooks in the USA?
Industry insiders have been bracing for this for months, ever since the bill passed earlier in the year. It has been a difficult year for those bullish on the sector, with several governmental roadblocks slamming the brakes on what had been a rapidly growing sector.
The New York case takes the total number of legislative bans in states to six (California, Connecticut, Montana, New Jersey, New York and Nevada) , while there are additional cease and desist orders in 13 other states. In Louisiana and West Virginia, action from state Attorney Generals is pending.
A case in Connecticut revealed how one company had lured problem gamblers back to their website, breaking several massive legal and ethical taboos in the process. High5Gaming were fined $1.5 million for their role and had their licence to provide online slot machine content for Connecticut’s two legal computer gaming platforms (DraftKings and FanDuel) suspended.
Additionally, the American Gaming Association has branded sweepstakes platforms “unlicensed casinos” that bypass safeguards and deny states tax revenue, language that has been echoed in lawsuits and advocacy campaigns across multiple states.
For a sector that sold investors on nationwide access and light regulation, 2025 has shifted the narrative toward survival, with market exits, legal risk and fast-changing state laws weighing heavily on growth plans.
A slow down creeps into view for the sector
A recent 2025 KPMG report estimates the sweepstakes casino market grew at a 4-year compound annual growth rate (CAGR) of 60–70% between 2020 and 2024. The same study estimated industry gross and net revenues were “north of $10.6 billion and $3.4 billion” respectively, with projections for 2025 above $14.3 billion gross and $4.6 billion net.
Those projections, however, assumed regulatory stability that no longer exists.
The impact recent events will have on the overall valuation of the sector remains to be seen, but there is little doubt market saturation and potential contractions due to the shifting legal outlook of the sector could lead to a marked slow down in growth.
References
- EGR: https://www.egr.global/northamerica/insight/eilers-krejcik-gaming-the-bottom-line/
- SGLA Press Release: https://sgleadership.org/sgla-condemns-new-york-ban-on-social-plus-games-costing-the-state-hundreds-of-millions-in-economic-activity-and-potential-revenue/
- KMPG: https://kpmg.com/kpmg-us/content/dam/kpmg/pdf/2025/sweepstakes-gaming-emerging-industry-primer.pdf
- Connecticut: https://www.ctinsider.com/connecticut/article/ct-dcp-settlement-illegal-online-casino-high5games-20356960.php
