This week, entertainment company VGW has made the decision to suspend its sweepstakes offerings in the state of New Jersey. This has come after the announcement that the state will be banning sweepstakes casinos.
New Jersey has joined in on the trend to ban sweepstakes betting, following hot on the trail of New York and Connecticut. The new law will take effect on August 14th if no action is taken, in a legal move known as a “pocket approval”. The law essentially bans online casinos offering ‘free play models’.
New Jersey officials have been in talks over Assembly Bill 5447, which marks sweepstakes casinos as a form of gambling. Insiders in the gambling industry felt hopeful that New Jersey would be the first state to opt for regulating sweepstakes gambling rather than the outright outlawing of the practice. However, lawmakers failed to oppose the bill.
The bill was voted in in both the Senate and the Assembly by a landslide. Until recently, these casinos could trade side by side with platforms among the best of the 2025 casino list. However, they would do so by operating through a legal loophole that protected them from being classified as a form of gambling. In contrast, real money sites spend a fortune on taxes and other expenses to provide players with features like fast payouts and lucrative bonuses.
Sweepstakes casinos have been operating in New Jersey through online websites, which are often based offshore and offer a wide variety of gameplay. Many of these gaming mechanics imitate traditional casino features like slot machines, but they also offer lottery-style games, bingo, and sports betting. These mechanisms lead a player to be entered into a draw for a prize, which is what has protected these websites from being defined as online casinos.
They have also been able to operate freely by not trading in regular currency, rather using crypto tokens or a dual currency model. In the dual currency model, real currency isn’t used for betting, and instead in-game tokens are used and traded for prizes with cash value. Game tokens can be loose or bundled, and individual tokens are valued at approximately a dollar. In the Garden State, these games will still be allowed as long as these tokens cannot be traded for real-world prizes.
Unfortunately for New Jersey players, VGW offerings on several platforms will be affected because of these laws. Their sweepstakes games will be withdrawn from the state. However, a VGW spokesperson did clarify to Gambling Insider that its Gold Coin system will still be available for in-state players who enjoy VGW’s free-to-play product.
The spokesperson has also stated that the company is committed to engaging with New Jersey lawmakers respectfully, and that VGW intends to work on establishing regulatory and taxation structures that benefit both the state and its players. This statement shows VGW’s goodwill in withdrawing from the Garden State and their hopes of reentering on good terms with state governance.
VGW is not the only online entertainment company that has willfully withdrawn from the state in anticipation of these new laws. B-Two Operations Limited, a competing entertainment company, has withdrawn its sites, along with several others who will also exit New Jersey.
New Jersey may be the most recent to ban sweepstakes games; however, it is unlikely that they will be the last. Following votes in New York and Connecticut, which have seen VGW wind down operations in these areas, further states are looking to outlaw the practice. VGW has received cease-and-desist letters from states’ gambling operators in both Mississippi and Delaware.
Montana has also joined the ranks of US states that have opted to pass legislation banning sweepstakes casinos, with laws focusing specifically on online casinos and internet gambling. Montana has strict laws on other forms of gambling, where sports betting and tribal-run casinos are prohibited, and bars and restaurants have limited provisions made for gaming machines.
In the state of California, sweepstakes casinos are being met by fierce opposition from local gambling groups. These groups include the Tribes of California, which consist of the Indian Gaming Association (IGA) and the California Nations Indian Gaming Association (CNIGA). These groups have criticised online casinos for being unregulated and have called for them to be prohibited. In California, tribal gambling produces over 112,000 jobs and contributes $25 billion to the local economy annually. Sweepstakes gambling poses a threat in these areas, where the industry of gambling is carefully protected.
Across the USA, online slot machines are illegal. However, the mechanisms used by online casinos to bypass these laws have not received much regulation. With attention being turned to online casinos, sweepstakes operations and dual currency models could see another wave of transformation. This will in turn allow them to better align with evolving state legislation.
