Virginia Pushes Statewide Ban on Sweepstakes Casinos Under HB161
Virginia lawmakers have moved to ban sweepstakes-style casinos statewide.
LISTEN TO THIS ARTICLE:Delegate Marcus Simon (D-13) introduced House Bill 161 in January 2026, a measure that would outlaw sweepstakes gaming in Virginia unless the activity is run by a licensed internet gaming operator. The draft law treats any sweepstakes in which a person in the Commonwealth participates by paying or offering something of value as illegal internet gaming, and imposes steep civil penalties for violations – up to $100,000 for a first offense and up to $250,000 for subsequent offenses, with each day of continued noncompliance counted as a separate violation.
The bill targets so-called dual-currency models that many sweepstakes sites use. Under HB161, a sweepstakes is defined broadly to cover promotional contests or games conducted online or in person where prizes or equivalents are awarded, including through a secondary or exchangeable currency determined by the state’s gaming board. That language mirrors steps other states have taken in recent months to close perceived regulatory loopholes in sweepstakes-style operations.
HB161 is bundled with a wider push to create a regulated internet gaming framework in Virginia. Only Virginia’s licensed brick-and-mortar casino operators would be eligible to hold iGaming licenses under the proposal, and each approved operator could offer up to three separate online platforms. The state currently has five approved casino projects, and the bill would attach significant upfront costs to online entry: a $500,000 application fee (renewable at half the cost after five years) and a $2 million platform notice fee per skin, with renewals set at $1 million. Those platform fees are earmarked for a fund to finance the establishment of a gaming commission or combined gaming agency; the bill also contemplates a proposed 15% tax on adjusted gross internet gaming revenue.
If every approved Virginia casino pursued the maximum three iGaming skins, the initial platform fees alone would total approximately $30 million, and when combined with application fees, the state could collect around $32.5 million before annual taxes on revenue. That scale of fees and the licensing restriction make clear the legislature’s intent to confine online gambling to regulated incumbents rather than allow unlicensed sweepstakes operators to continue under a promotional guise.
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Next Steps for Operators and Regulators
The Virginia measure joins a wave of 2026 state actions aimed at sweepstakes casinos. Legislatures in Maine, Florida and Mississippi have introduced similar measures this session, while Indiana lawmakers are advancing HB 1052 to ban dual-currency sweepstakes casinos, and states such as Illinois have already seen operators withdraw products amid enforcement pressure. The momentum reflects growing state-level concern about consumer protection, underage access and the difficulty of policing hybrid sweepstakes models.
Regulatory and industry fallout could be rapid. Attorney general offices and state gaming regulators have signaled they will issue cease-and-desist letters to operators that fall within these new statutory definitions. Operators that rely on dual-currency models, and vendors that supply games to those operators, face either compliance costs to move into regulated markets or potential litigation and enforcement actions.
"States are signaling that tolerance for unregulated sweepstakes-style gaming is over", said Alexandra Perez, a regulatory consultant with experience advising state gaming agencies. "Lawmakers want clear lines: licensed operators that contribute tax revenue and oversight, and a hard stop on fly-by-night models that skirt consumer protections. Operators will need to decide quickly whether to pursue licensure, restructure their products, or exit state markets entirely."
If HB161 advances through the Virginia General Assembly, expect rapid regulatory guidance from the state’s attorney general and the new gaming agency that the bill proposes funding. Legal challenges are also possible: operators and suppliers may contest the bill’s reach or seek clarification over definitions such as what constitutes a ‘prize equivalent’ or a dual-currency system. For now, the trend among legislatures is clear – greater constraints on sweepstakes casinos and a preference for bringing online play under licensed, taxable frameworks.
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