Sweepstakes Casinos: What Are They & Are They Legal?

3D USA Map with Casino Products

In the United States of America, the gambling laws have long led to different people and companies trying to find ways around the manner in which certain things have been illegal depending on which state you found yourself in. It is an odd situation in the eyes of outsiders that a state like Nevada can be home to one of the world’s best-known gambling meccas in Las Vegas, but other states only allow specific types of gambling to take place within them. Sweepstakes casinos are a way for stakes to allow punters to engage in casino-style gaming through a sweepstakes model, thereby making it legal when it otherwise wouldn’t be.

A Brief History of Sweepstakes Casinos

Red and Blue Neon Open SignThe idea behind sweepstakes casinos can trace its root back to the turn of the millennium. That was when places known as sweepstakes parlors or sweepstakes cafés began to offer punters the chance to play casino-style games even when it was illegal to do so in certain states. The reason they began was that sweepstakes were seen as pre-determined games, as opposed to games of chance. That meant, at least according to the operators, that the games fell outside of the state gambling laws in the likes of North Carolina, California and Utah. The venues combined the sale of internet time with the chance to win a prize.

Because the prizes on offer were awarded through sweepstakes entries, it provided a legal loophole around the idea of direct gambling. Players could play the likes of slot-style games or table games with the chance to win a decent prize, which is why they became so popular. As the technology began to develop to mean that people didn’t need to go to a physical café in order to get online, the sweepstakes model made the transition to the online world. It allowed for a broader reach, giving people in locations where gambling was more fiercely restricted the chance to play such games legally from the comfort of their own home.

How Sweepstakes Casinos Work

McLuck Screenshot

It is fair to say that things have come a long way since the turn of the millennium, with technology changing at a rapid rate. Even so, the nature of sweepstakes casinos has remained much the same, providing those that might not be allowed to gamble legally in their home state with the chance to do just that. The appeal of sweepstakes casinos lies in the fact that they use innovative mechanics in order to operate, with Gold Coins and Sweepstakes Coins sitting at the centre of proceedings. It offers a legal gaming experience that essentially mimics real-money gambling that would otherwise be illegal in certain areas.

Gold Coins are used to play games purely for fun, having no monetary value and not being redeemable for cash. They are often acquired through the likes of bonuses, purchases or promotions and have the primary purpose of allow players to enjoy casino-style games without any financial risk. Sweepstakes Coins, meanwhile, are where the gambling aspect comes into play. Sometimes referred to as Sweeps Coins, they can be used to play games that have the ability to be redeemed for real money prizes. They can be gained through numerous ways that ensure the ‘no purchase necessary’ laws aren’t broken, which is key.

By having a dual currency system, sweepstakes casinos are able to ensure legal compliance at the same time as introducing an engaging gameplay dynamic. Players are able to switch between the method that allows them to play for fun and the one that involves playing for cash prizes, promising a versatile gaming experience. It is key to balance the player’s experience with the regulatory and legal obligations that are in place to stop people from gambling illegally and ensuring a transparent and fair gaming environment. That can also be seen in the manner in which players redeem Sweepstakes Coins for cash prizes, with players having to tick certain boxes.

Are They Legal?

Vegas Gems ScreenshotThere is a conversation to be had around whether or not sweepstakes casinos are legal. There have been certain states over the years that have prosecuted such venues and won, for example. If you’re wondering what all of the fuss is about then it is important to acknowledge that sweepstakes casinos are specific to the United States of America, which is why they will doubtless seem like alien concepts to people in countries where petty much all forms of gambling are legal, such as the UK. The fact that they are operated as sweepstakes companies is what allows them to be legal in the United States in places where gambling would otherwise be illegal.

The fact that they are sweepstakes companies means that there are still laws and rules for them to follow in order to be legal. The ‘no purchase necessary’ policy is a crucial one, allowing punters to play without having made a purchase of any sort. Of course, that isn’t only way that you can play. Players need to purchase Gold Coin packages that ‘include’ free Sweepstakes Coins, which are usually of an equivalent value to the purchase. In other words, people would buy a $50 Gold Coin package, say, that includes $50 worth of Sweepstakes Coins that can be used on sweepstakes games before being redeemed for real cash, should they be winners.

The nature of the way that the United States works is such that each individual state decides what is legal and what isn’t. Sweepstakes casinos are illegal in Washington, for example, whilst they are severely restricted in Idaho. In New York and Florida there is a restriction in place on the maximum cash prize that can be won via a sweepstakes casino. All of the legitimate sweepstakes casinos abide by both the regulations that put in place on sweepstakes companies and on any restrictions that the specific states have put in place. The important thing is, though, that they are legal in states where they are not banned, which is the key information for bettors.