New York Attorney General, Letitia James (pictured) has issued cease and desist letters to 26 sweepstakes casinos formerly operating in the state, including Chumba, McLuck, and Zula.
All recipients apparently complied, and we’ve added the full list of operators at the end of this article. However, this is not the full cohort of sweepstakes casinos in New York, so plenty remain for now.
It appears the letters were sent out in March this year, demanding that operators “immediately cease all prohibited gambling activity and related promotions in New York”. This would explain the story we reported last month of VGW exiting the Empire State, plus news of other operators pulling out in April.
The letters also stated the following:
“Most sweepstakes casinos are illegal in New York. The New York State Constitution prohibits gambling in all forms not specifically authorized.”
They then cited specific laws to support this:
- Article I, § 9 of the state constitution: Bans all gambling unless explicitly authorized.
- Penal Law §§ 225.00–225.40: Defines illegal gambling as risking something of value on a game of chance for the chance to win something else of value.
James argued that sweepstakes casinos meet this definition as players at sweeps sites purchase and play with virtual coins (i.e., Sweepstakes Coins) that can be redeemed for prizes or cash equivalents.
A Case for Challenging the Orders?
We’ve seen that event contracts platform, Kalshi has been in the news lately for challenging cease and desist letters from state gaming regulators. While the outcome in these cases is still to be decided, it shows that C&D orders can be contested if an argument is available.
However, with all 26 sweepstakes operators complying with James’ demand without a legal challenge, it suggests her argument is difficult to contest.
Sweepstakes casinos generally operate on the assumption that they’re not classed as traditional gambling – this is thanks to the option to play for free (with Gold Coins and plentiful bonuses), therefore removing the need for ‘consideration’ AKA payment. However, it seems the operators are not confident enough to challenge New York’s legal wording in this case.
James’ official press release included a quote from Senator Joseph P. Addabbo, who added:
“At a time when illegal gambling, underage participation, and identity theft are soaring, it is deeply concerning that prohibited, unregulated, and unenforceable gambling entities are providing easy access to illegal gaming sites and obtaining personal information of unsuspecting New Yorkers.”
This mirrors the questionable framing of sweepstakes casinos as untrustworthy operators that we’ve seen in debates in other states, as the vertical as a whole becomes a hot topic in US legislatures.
Addabbo sits as Chair of NY’s Committee on Racing, Gaming and Wagering and introduced Senate Bill S5935 this year. Its passage seems to have halted for now, but its counterpart, Assembly Bill 6745 is still making progress, having passed through the Ways and Means Committee last week. This proposal specifically prohibits sweepstakes games by name, and, if it passed, it would be the nail in the coffin for all sweepstakes casinos in the state, removing any doubt over interpretations of the vertical’s legality in NY.
Addabbo has also made multiple pushes for legal iGaming in the state. His efforts this year were once again unsuccessful, but it seems removing sweepstakes casinos is part of his clearing the way for traditional online casinos.
The SPGA Responds
The Social and Promotional Games Association (SPGA), a trade group representing multiple sweepstake casinos, responded with disappointment and disagreement to news of James banning the 26 operators:
“Sweepstakes promotions are not gambling under federal law and are legally permitted in the overwhelming majority of U.S. states, including New York. Despite multiple attempts to engage directly with New York lawmakers and regulators, our outreach has gone ignored. Instead of working collaboratively to establish clear, modern rules for platforms that offer free-to-play games and do not require a purchase to win, the state has opted for overreach.”
As a side note, James (Democrats) is currently involved in legal battles with President Donald Trump. She successfully sued him in 2022 for inflating his assets to secure loans. Trump has since fired back with lawsuits of his own and is reportedly tied to a federal investigation targeting James, which she dismissed as politically motivated.
To finish, here is the full list of sweepstakes operators James banned in New York state:
Author: Joseph Allen
Updated:
