New York Bans Sweepstakes Casinos: Dual-Currency Model Outlawed
Governor Kathy Hochul on Thursday enacted legislation outlawing dual-currency sweepstakes casinos across New York.
LISTEN TO THIS ARTICLE:On Dec. 4, 2025, New York became the latest U.S. state to move decisively against the sweepstakes casino model when Governor Kathy Hochul signed Senate Bill 5935 into law. The statute targets platforms that use dual-currency systems – where consumers purchase one virtual token and receive a separate, promotional token that can be redeemed for cash or cash equivalents – and extends liability beyond operators to their business partners.
SB 5935 explicitly prohibits sweepstakes casinos and makes clear that vendors, payment processors, advertisers and affiliate marketers who support those operations can be held accountable. Penalties range from civil fines of $10,000 to $100,000 per violation, and licensed gaming entities that run afoul of the new rules face license revocation. Other businesses found in violation may be disqualified from future licensing opportunities.
Enforcement responsibility will be shared among the New York State Gaming Commission, state law enforcement and the New York Attorney General’s office. The law includes an enforcement timetable that permits regulators to issue cease-and-desist orders and levy administrative penalties as they investigate compliance.
Senator Joseph Addabbo, chair of the State Senate Racing, Wagering and Gaming Committee and the bill’s sponsor, framed the measure as a consumer-protection step. "This legislation closes a loophole that has allowed operators to mimic gambling while avoiding regulatory oversight," Addabbo said. "New Yorkers deserve clear, enforceable rules and protections against products that operate like casinos without the safeguards of licensed gaming."
Related: New York Sweeps Casino Ban Reaches Gov. Hochul With Dec. 31 Deadline
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Enforcement and Industry Response
The law lands amid a growing national backlash against sweepstakes-style products. Regulators in Maryland have pursued enforcement actions, Florida and Maine lawmakers are considering similar bans, and California enacted its own prohibition effective January 1, 2026. With New York and California – two of the largest U.S. consumer markets – now off-limits, industry observers expect a rapid reshaping of the sweepstakes sector.
Industry groups and some operators have warned of unintended consequences. A spokesman for the Social Gaming Leadership Alliance said, "A blanket ban will punish legitimate small businesses and thousands of workers while pushing high-risk activity into less transparent channels. We urged lawmakers to consider a regulated framework rather than prohibition."
Legal challenges are likely. Operators that previously argued their dual-currency mechanics were lawful and non-gambling in nature may now turn to the courts to contest the law’s scope and constitutionality. At the same time, some companies may pivot quickly to entertainment-only models that use non-redeemable tokens, or exit New York altogether.
Regulatory officials will face practical questions about cross-border activity: many sweepstakes platforms are cloud-hosted and marketed nationally. The New York State Gaming Commission has said it will coordinate with federal and state partners, including neighboring states, to investigate payment flows and advertising channels that facilitate access for New York residents.
Beyond enforcement, the economic effects will be watched closely. While proponents of the ban frame it as protecting vulnerable consumers, opponents point to jobs, affiliate income and local marketing dollars that could disappear if operators leave the state or wind down operations.
For now, the law sets a clear new standard: the dual-currency sweepstakes format is no longer a tolerated business model in New York. How quickly regulators move and whether courts delay implementation will determine the speed and breadth of the industry’s next moves nationwide.
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