Sweepstakes casinos: four states, four ways past the free method of entry
New York defined the product, California counted the free coin, Tennessee called it a lottery and Illinois called it internet gambling — read in the statutes’ own words, and against the operators’ own terms.
The law in this article is current to Sep 28, 2026.
Every state that has acted on sweepstakes casinos has had to deal with the same argument: that a free way to get the prize currency removes the payment a lottery requires. New York, California, Tennessee and Illinois each dealt with it differently, and the route a state took decides what an operator, or a vendor serving one, has to answer.
The argument each state had to meet
Stake.us, the sweepstakes brand of the Stake group, states the operators’ position in its own terms. The paid currency is Gold Coins; the prize currency is Stake Cash, which is never sold:
2.4. THE PLATFORM AND GAMES DO NOT OFFER REAL MONEY GAMBLING, AND NO ACTUAL MONEY IS REQUIRED TO PLAY.
b) YOU CANNOT PURCHASE STAKE CASH.STAKE CASH CAN BE OBTAINED ONLY THROUGH FREE, PROMOTIONAL OFFERS. … iii) Post Card – Customers can receive 5 free Stake Cash by sending a standard postcard on the terms set out in the clause 8.3.
The prize currency is never sold, and a postcard yields five of it. That is the free-entry argument in two clauses. Each state below reads the product differently.
| State | Instrument | Date | How it answers the free method of entry |
|---|---|---|---|
| New York | Statute: S5935-A (L. 2025, ch. 605), Racing, Pari-Mutuel Wagering and Breeding Law § 912 | Signed December 5, 2025 | Defines the game by its structure. The definition contains no consideration test, so the free route is never reached. |
| California | Statute: AB 831 (Stats. 2025, ch. 623), Penal Code § 337o | Approved October 11, 2025 | Keeps the element and counts the free coin as “indirect consideration”. |
| Tennessee | Cease-and-desist letters under existing law | December 29, 2025 | Treats the model as an illegal lottery prohibited by the Tennessee Constitution. |
| Illinois | Cease-and-desist letters under existing law | February 5, 2026 | Treats internet games of chance that award money or items of value as a crime. Consideration is not mentioned. |
New York: define the product, skip the element
(a) "Online sweepstakes game" shall mean any game, contest, or promotion that is available on the internet and/or accessible on a mobile phone, computer terminal, or similar access device, that utilizes a dual-currency system of payment allowing the player to exchange the currency for any cash prize, cash award or cash equivalents, or any chance to win any cash prize, cash award or cash equivalents, and simulates casino-style gaming, including but not limited to, slot machines, video poker, table games, lottery games, bingo, or sports wagering.
No part of the definition asks whether a free entry exists. A postcard route changes nothing under this text.
California: count the free coin
(1) “Direct consideration” means a coin, token, or other representation of value that may be purchased by a player or received through a bonus or promotion and that is used for playing or participating in the online sweepstakes game. (2) “Indirect consideration” means a coin, token, or other representation of value that may be exchanged for a prize, award, cash, or cash equivalents or a chance to win a prize, award, cash, or cash equivalents. Indirect consideration is provided for free through a promotion, bonus, or with the purchase of a related product, service, or activity. As used in this paragraph, “related product, service, or activity” includes a coin, token, or other representation of value that may be used for direct consideration.
A prize coin handed out “as a bonus upon the purchase of specifically marked packs” of the paid coin is the pattern this definition describes, and the paid coin is itself named as the “related product”.
Tennessee and Illinois: existing law, two theories
Neither state needed a new statute. Tennessee reads its constitution as a lottery ban and addresses consideration directly:
The promotional sweepstakes model used by these casinos constitutes an illegal lottery prohibited by the Tennessee Constitution and violates Tennessee gambling and consumer-protection laws.
Illinois reads its criminal law as an internet-gambling ban, and the free method of entry is never reached:
Offering games of chance that award money or other items of value via the internet violates Illinois criminal law.
The supply chain is inside the statutes
Both statutes reach past the operator. California requires a state of mind:
(b) It is unlawful for any entity, financial institution, payment processor, geolocation provider, gaming content supplier, platform provider, or media affiliate to knowingly and willfully support directly or indirectly the operation, conduct, or promotion of an online sweepstakes game within this state.
New York does not:
(b) It shall be unlawful for any applicant, licensed entity, financial institution, payment processor, geolocation provider, gaming content supplier, platform provider, or media affiliate to support the operation, conduct, or promotion of online sweepstakes games within the state of New York.
There is no “knowingly and willfully” in New York’s text. A vendor’s knowledge is not an element of the prohibition.
The penalties differ in the same direction. California makes a violation a misdemeanor, with a fine of $1,000 to $25,000, up to a year in county jail, or both. New York sets a fine of $10,000 to $100,000 for each violation and puts a gaming license at risk.
How operators have adapted
The operators’ exclusion lists follow the routes. Stake.us’s terms now exclude 22 states, New York, California, Tennessee and Illinois among them, and its own change log records ten versions adding states between February 20, 2025 and July 10, 2026. The latest four:
Version 15.0 30/12/2025 Addition of further State to "Excluded Territories". Version 16.0 19/05/2026 Addition of further State to "Excluded Territories". Version 17.0 01/07/2026 Addition of further State to "Excluded Territories". Version 18.0 10/07/2026 Addition of further State to "Excluded Territories".
Stake.us told California customers it would leave from December 30, 2025. Chumba’s and High 5’s current rules both exclude New York, California and Tennessee.
What a builder does with this
- Sort states by route, not by count. A state that defines the product by its structure cannot be answered with an entry method.
- Treat the free method of entry as one part of the compliance case, not the whole of it. New York’s definition does not reach it, Illinois’s release does not mention it, and California counts the free coin as consideration.
- Check every vendor in the stack, from payments to geolocation to content to platform, against the states that name suppliers. New York’s supplier provision has no knowledge requirement, so vendor diligence carries more weight there.
A free method of entry answers one element of one test. The route a state took decides whether it matters at all.
Sources
- New York S5935-A (L. 2025, ch. 605): adds Racing, Pari-Mutuel Wagering and Breeding Law § 912
- California AB 831 (Stats. 2025, ch. 623): adds Penal Code § 337o; amends Business and Professions Code § 17539.1
- Tennessee Attorney General’s Office, press release PR25-61 (Dec. 29, 2025)
- Illinois Gaming Board, press release: cease-and-desist letters to illegal online casino and sweepstakes operators (Feb. 5, 2026)
- Stake.us, Terms & Conditions, version 18.0 (July 10, 2026)
- SweepsKings, “Stake.us and Rolling Riches Announce California Exits” (Nov. 12, 2025), quoting Stake.us’s customer email
- Chumba Casino (VGW), Sweeps Rules, version 26.1 (Sept. 16, 2026)
- High 5 Casino, Sweepstakes Official Rules, version 43.0 (June 26, 2026)
Originally published by Apparently Law at www.apparentlylaw.com/research/sweepstakes-casinos-four-states-four-routes.