States Push Forward With New Laws Targeting Sweepstakes Casinos and Their Supporting Networks

Multiple U.S. states have moved ahead with legislation aimed at sweepstakes casino platforms that rely on dual-currency models, and the effort now reaches payment processors, banks, geolocation providers, and affiliate networks. As of late May 2026 at least nine states have passed such measures since 2025, while bills remain active in Minnesota, Virginia, Tennessee, Maryland, and Louisiana that specifically call out service providers.

Background on the Legislative Push

The pattern builds directly on actions taken during 2025 in New York, Connecticut, New Jersey, California, and Montana, where lawmakers first addressed promotional sweepstakes structures. Those earlier statutes created the foundation for the current round of bills that close perceived loopholes around how these platforms operate without traditional gaming licenses.

Analysts at the law firm Venable LLP tracked the progression across statehouses, noting that the focus has shifted from the platforms themselves to every company that enables or profits from the activity. The result is a broader regulatory net that includes financial institutions handling deposits and withdrawals, location-verification services, and marketing partners that drive traffic.

States Taking Action in 2026

Legislatures in several jurisdictions have already enacted or advanced the new rules, while others continue to debate language that would prohibit service providers from supporting sweepstakes casino operations. The bills often define the prohibited activity through specific references to dual-currency systems, free-to-play mechanics paired with prize redemptions, and the use of third-party processors to facilitate player funds.

Observers note that the pending measures in Minnesota, Virginia, Tennessee, Maryland, and Louisiana contain explicit sections addressing banks, payment processors, geolocation firms, and affiliate marketers. These provisions aim to prevent companies from claiming they merely supply neutral technology or marketing services while the underlying activity remains unregulated.

Role of Service Providers in the Crackdown

Earlier statutes sometimes left room for interpretation when it came to companies that do not directly operate the games. The newer legislation removes much of that ambiguity by listing categories of support services and stating that assisting or enabling the platforms constitutes a violation. Payment processors that route transactions, banks that maintain merchant accounts, and geolocation vendors that confirm player locations now face direct compliance obligations under the updated frameworks.

Affiliate networks that promote the platforms through referral links or advertising have also come under scrutiny. Several bills require these partners to verify that any promoted site holds proper authorization, or else risk penalties for facilitating unlawful gambling activity. The approach mirrors tactics used in other regulated industries where liability extends along the entire supply chain.

Analysis From Venable LLP

Legal experts at Venable LLP compiled state-by-state comparisons showing how the 2026 measures differ from the 2025 round. Their review highlights that the current statutes include clearer definitions of what constitutes a sweepstakes casino, more explicit prohibitions on support services, and stronger enforcement mechanisms such as civil fines and potential criminal referrals for repeat violations. The firm’s tracking indicates that states are coordinating language across jurisdictions to reduce the chance that platforms can simply relocate operations.

Data compiled through this legislative tracking shows consistent themes: requirements for geolocation accuracy, restrictions on payment methods, and mandatory disclosures for any promotional sweepstakes that cross state lines. These elements appear repeatedly in the enacted and pending bills, suggesting a coordinated effort rather than isolated state actions.

Impact on the Broader Ecosystem

Companies that previously operated at arm’s length from the gaming platforms now face direct compliance questions. Payment processors must determine whether to continue processing transactions for dual-currency sites or to implement blocks that align with the new state laws. Banks that provide merchant services similarly evaluate their exposure under the updated statutes, while geolocation providers review contracts to ensure their technology cannot be used to circumvent state restrictions.

Affiliate marketers encounter new due-diligence requirements, including verification that promoted platforms comply with each state’s rules before accepting referral fees. Failure to conduct such checks can result in liability under the service-provider provisions now common in the legislation.

Pending Legislation and Next Steps

Bills still moving through Minnesota, Virginia, Tennessee, Maryland, and Louisiana contain language that would codify the service-provider restrictions if passed. Legislative calendars indicate further hearings and votes scheduled through the summer of 2026, with some measures already advancing out of committee. The outcome in these states will determine whether the nine-state total grows before the end of the current session.

Additional states have signaled interest in similar proposals, though formal introductions remain pending. The pattern suggests that once one jurisdiction adopts a particular enforcement tool, neighboring states often follow with comparable language within one or two legislative cycles.

Conclusion

The expansion of sweepstakes-casino legislation across multiple states since 2025 has produced a consistent focus on service providers as well as the platforms themselves. With at least nine states having acted and several more considering explicit restrictions on payment processors, banks, geolocation vendors, and affiliates, the regulatory environment continues to evolve. Venable LLP’s analysis of the pending measures in Minnesota, Virginia, Tennessee, Maryland, and Louisiana shows that the trend toward broader liability is likely to persist through the remainder of 2026.