Sweepstakes casinos · Brief · 8 min read
Sweepstakes casinos: what they are and the test that decides them
Two currencies, one free way in, and the three-element lottery test the model is designed around — read against the operators’ own rules, Tennessee and Illinois enforcement, and four new state statutes.
A sweepstakes casino sells a currency that wins nothing, gives away a currency that wins cash, and rests the whole structure on one legal claim: that a free way to get the second currency removes the payment a lottery requires. States are answering that claim one at a time. Tennessee and Illinois have acted under existing law by two different routes, four legislatures have written statutes on the model, and in most states it still operates under the operators’ own rules.
How the product works
Chumba Casino, run by VGW, sets the structure out in its own documents. Players buy Gold Coins, which play the games and win nothing:
Gold Coin means the virtual social gameplay token which enables you to play the Standard Play Games. Gold Coins have no monetary value and cannot under any circumstance be redeemed for prizes.
On the operator’s structure, the purchase buys play, not a chance at a prize.
Chumba’s public lobby: a banner pairs a Gold Coin pack with free Sweeps Coins, above the games.
The prize currency arrives at the same moment the money moves:
Receive Sweeps Coins as a free bonus when purchasing Gold Coins. Each Eligible Participant may receive Sweeps Coins as a bonus upon the purchase of specifically marked packs of Gold Coins.
Sweeps Coins arrive free, alongside the purchase. States differ on whether that pairing is payment.
The cash end is just as concrete. High 5 Casino, which calls its paid currency Game Coins, sets a rate and a floor:
You must accumulate a minimum of one hundred (100) Sweeps Coins eligible to be redeemed in order to submit a request for a cash prize. For purposes of redemption only, one (1) Sweeps Coin will be redeemable for one dollar ($1.00) in Prize. Sweeps Coins possess no monetary value until redeemed.
One Sweeps Coin is one dollar. A player holding 100 won Sweeps Coins asks for $100.
The test: prize, chance, consideration
A lottery has three elements. California wrote them down in 1872, and the words still govern:
A lottery is any scheme for the disposal or distribution of property by chance, among persons who have paid or promised to pay any valuable consideration for the chance of obtaining such property or a portion of it, or for any share or any interest in such property, upon any agreement, understanding, or expectation that it is to be distributed or disposed of by lot or chance, whether called a lottery, raffle, or gift enterprise, or by whatever name the same may be known.
The last clause means the label “sweepstakes” does not take a product outside the definition.
All the parties agree that there are three essential elements of a "lottery, gift enterprise, or similar scheme": (1) the distribution of prizes; (2) according to chance; (3) for a consideration.
Map the product onto the test. The prize is the Sweeps Coin, worth a dollar at redemption. The chance is the slot or table game. Consideration is the element the model is designed to leave out.
The free method of entry
Every operator offers a way to get Sweeps Coins without buying anything. The argument runs: if the prize currency is free to anyone who asks, nobody paid for the chance to win, consideration is absent, and the product is a lawful sweepstakes. The rules open with that claim in capitals:
NO PURCHASE OR PAYMENT NECESSARY TO PARTICIPATE.
The free route runs alongside the paid one. High 5 offers it by post:
6.2.4 Mail-In Entry (Alternate Mode of Entry): An Authorized Account Holder (defined below) can receive free Sweeps Coins by sending a Request Card (defined below) via mail as follows: … 6.2.4.10 A Participant will receive three (3) Sweeps Coins per mail-in request.
Three Sweeps Coins per mail-in request, available to any eligible player without a purchase.
Chumba has moved off the post. Its December 2023 rules asked for a card posted in a stamped #10 envelope addressed by hand, for five Sweeps Coins. Its September 2026 rules replace the post with a photograph of a handwritten card:
Receive Sweeps Coins by completing an online request. … capture a clear and well-lit photo of the completed Entry Request Card using the camera on the Eligible Participant’s device. … For each valid online request an Eligible Participant submits in accordance with the above requirements, the Eligible Participant will receive five (5) Sweeps Coins.
The free route is what the sweepstakes argument rests on. States have given different answers on whether it is enough.
What Tennessee said
Tennessee’s Attorney General treats the product as a lottery, which engages the operators’ consideration argument 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. … The Attorney General sent formal cease-and-desist letters to almost forty online sweepstakes casinos operating illegally. All platforms that received a letter have already disabled the unlawful components of their platforms or have agreed on a date in the coming weeks for winding down their illegal services, effectively shutting down their illegal sweepstakes casinos.
The release reports the result, not the letters’ terms: every recipient disabled the product or agreed a wind-down date.
The release lists 38 recipients that said they would comply, including Chumba, High 5 Casino, Stake and McLuck. Chumba’s September 2026 rules now exclude Tennessee. The Attorney General’s position rests on the constitution’s lottery clause:
Section 5. The legislature shall have no power to authorize lotteries for any purpose, and shall pass laws to prohibit the sale of lottery tickets in this state, except that the legislature may authorize a state lottery if the net proceeds of the lottery's revenues are allocated to provide financial assistance to citizens of this state to enable such citizens to attend post-secondary educational institutions located within this state.
What Illinois said
Illinois took a different route, and the difference is the most useful thing in either release:
The cease-and-desist letters demand that entities allegedly operating online casinos or sweepstakes platforms immediately block Illinois residents from accessing their internet sites or discontinue offering prizes to Illinois users. … Offering games of chance that award money or other items of value via the internet violates Illinois criminal law.
(12) knowingly establishes, maintains, or operates an Internet site that permits a person to play a game of chance or skill for money or other thing of value by means of the Internet or to make a wager upon the result of any game, contest, political nomination, appointment, or election by means of the Internet.
The provision asks whether a game of chance is played for a thing of value over the internet. It has no consideration element for a free entry route to defeat.
The Gaming Board’s release never uses the words consideration, purchase or pay. Its remedy aims at the prize: block Illinois residents, or stop offering them prizes. Courts read “thing of value” broadly. The Ninth Circuit held that a social casino whose chips paid out nothing in cash was illegal gambling under Washington law:
We therefore reverse the district court and hold that because Big Fish Casino’s virtual chips are a “thing of value,” Big Fish Casino constitutes illegal gambling under Washington law.
Four legislatures addressed the model by statute
Four states addressed the model directly by statute: Connecticut (Public Act 25-112, approved June 24, 2025), New Jersey (P.L. 2025, c. 128, approved August 15, 2025), California (AB 831, approved October 11, 2025) and New York (S5935-A, signed December 5, 2025). California defines the free currency as consideration:
(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.
Under this text, a Sweeps Coin handed out as a “free bonus” with a Gold Coin purchase is consideration.
How the market has moved
The operators’ own rules track these changes. Chumba’s December 2023 rules excluded three states: Idaho, Michigan and Washington. Its September 2026 rules exclude sixteen and permit Sweeps play in the rest:
Permitted Territories means the United States (other than the states of California, Connecticut, Delaware, Idaho, Indiana, Louisiana, Maine, Michigan, Mississippi, Montana, Nevada, New Jersey, New York, Tennessee, Washington, and West Virginia); and
High 5 Casino’s rules exclude 21 states and carry notices that it stopped serving Indiana and Iowa on June 16, 2026 and Maine on June 26, 2026. Stake.us told California customers it would leave on December 30, 2025. On June 17, 2026, Kentucky’s Attorney General sued VGW, and described the product this way:
The online casinos offer two types of chips – one for free and one with a cash value. Users pay real money for so-called Sweeps Coins just like gamblers pay for poker chips at a real casino.
Kentucky’s complaint characterizes the purchase as payment for the prize currency and seeks treble damages under the Loss Recovery Act. These are allegations in a case filed in June 2026; no judgment has been reported.
Why the difference decides the analysis
A free method of entry answers the lottery test’s third element. It does not answer a statute that prohibits internet gambling for a thing of value, and it does not answer a statute that defines the free currency as consideration. Tennessee’s ground runs through the lottery test, so the contest there is over consideration. Illinois’s does not, so the contest there is over whether the product is internet gambling at all. In California, Connecticut, New Jersey and New York the legislature has decided the question.
What a builder does with this
- Map each state’s stated theory before launch: a lottery (Tennessee), internet gambling for a thing of value (Illinois), or a statute aimed at the dual-currency structure (California, Connecticut, New Jersey, New York).
- Treat the free entry route as necessary in a lottery state and irrelevant under an internet-gambling statute or a dual-currency ban.
- Read the market leaders’ exclusion lists. Chumba’s grew from three states to sixteen in under three years, and High 5’s stands at 21. They are the operators’ own map of where they have chosen not to offer Sweeps play.
- Read enforcement releases for what they leave out. Illinois’s release does not mention consideration, which tells a builder which argument matters there.
The next briefs set out how four states answered the question and the design choices their statutes leave open.