Cease-and-Desist Letters: A Real Impact on the Sweepstakes Casino Industry?
Sweepstakes casinos have enjoyed a nice run in the gambling landscape, but it appears that their time is coming to an end in most places around the United States. A big reason for that pessimistic outlook is the wave of cease-and-desist letters that have been dispersed to operators.
What is particularly interesting about this song and dance is that, despite receiving cease-and-desist letters, many operators have continued to do business as usual. In fact, a recent study found that 97% of operators who received the C&D letters from Illinois were still operating as if nothing had changed. Operators are doing this all over the country, setting the stage for an old-fashioned standoff.
In this article, I’ll do a national recap of where U.S. states stand, which states’ operators received cease-and-desist letters, and what this means for the industry as a whole. It’s worth noting that a good number of these states involved in standoffs already have some form of online or retail sports betting and casino play available there.
The Rise of Sweepstakes Casinos, Regulatory Backlash
The first time sweepstakes casinos launched was all the way back in 2005, when some southern U.S. states (Florida and Texas among the first) had them available at retail locations. In 2012, Chumba Casino (via Virtual Gaming Worlds) was the first company to offer its games online at scale. VGW is an Australian company that skirted the laws of most U.S. states and became an example of how operators could do business across the country.
Now that we’re in 2025, the entire landscape has become a battleground between U.S. states and operators. Many states have gone far beyond sending cease-and-desist letters, flat-out banning sweepstakes casinos within their jurisdictions.
U.S. States Sending Cease-and-Desist Letters to Sweepstakes Casino Operators
With no clear regulations for all 50 U.S. states, it is going to be chaos from now until the end of each state’s legislative session. Some states have imposed statewide bans, while others are still scratching and clawing their way to the finish line.
Let’s take a look at some of the more high-profile battles going on around the United States involving sweepstakes casinos:
Illinois Says Stop Sweepstakes Casino Operations, Operators Don’t Budge
In February, in coordination with the Attorney General’s Office, the Illinois Gaming Board (IGB) issued 65 cease-and-desist letters to sweepstakes casino operators, telling them to block in-state residents immediately.
Sweepstakes casino operators in the Land of Lincoln didn’t care much for the cease-and-desist letters coming their way and remained in business anyway. In fact, three months after the letters were sent, only two operators (JefeBet and Jumbo88) decided to comply with the law.
It’s a fluid situation, but all Illinois customers should be on notice going forward. Any day now, a sweepstakes casino operator could spontaneously say they’ve had enough with the worry and close up shop. That would put customers in a precarious position, especially if they have money in their accounts.
Louisiana & Tennessee: Southern Charm of High Compliance
Down south, Louisiana and Tennessee emerged as two of the most aggressive states against sweepstakes casinos. Each of them sent around 40 cease-and-desist letters, and nearly all complied rather quickly.
These were interesting cases of compliance, given the lack thereof observed in Illinois. One could argue that the Louisiana and Tennessee markets don’t get as much business as Illinois, so the decision to fold was an easy one rather than fighting it out in court.
Maryland on the Move
Maryland has yet to ban sweepstakes casinos outright. Still, they sent a whopping 89 cease-and-desist letters to unlicensed online gambling operators, with about one-third of the operators choosing to comply.
It was a mixed bag of results in the Old Line State, with some leaving voluntarily while others chose to do nothing at all. Maryland is one of the more distinctive states because of its proximity to places like Delaware, the District of Columbia, and Virginia, where there are plenty of options for bettors to get in on the action.
New York Showing East Coast Brut
New York didn’t send as many cease-and-desist letters as their counterparts, but they were surely more effective. All 26 operators that received the C&D letters stopped operations in the state.
The moves by the New York Attorney General’s Office were swift, as they didn’t allow the sweepstakes casinos to gain a foothold for traction. Instead, the operators were hit hard right off the bat, putting them on the defensive from the start. Many experts have said this should be the approach for all states looking to ban sweepstakes casinos.
Related Articles
Cease-and-Desist Letters: Volume vs. Impact
As we saw in the last subsection, New York was much more effective than other states at sending cease-and-desist letters. Other states opted to send C&D letters in multiple waves, launching repeated campaigns that sent most of the major names running for the hills. Minnesota (14) and Mississippi (10) both had relatively low counts of successful attempts sent to operators.
Just because they threw a lot at a particular state’s wall, it didn’t mean that it stuck. Take Illinois and Maryland, for example: both ranked #1 and #2 in terms of volume. However, it really just left them with more chances to be rejected than swiping on a dating app in those states.
Effectiveness of Cease-and-Desist Letters
Many legal experts say noncompliance with cease-and-desist letters is widely known as a legal strategy. The main argument is that the C&D letters are demands, not necessarily court orders.
In states like Illinois, the operators were banking on the uncertainty angle playing in their favor. If no one knew exactly how to categorize sweepstakes casinos on the national scale, then they wouldn’t be found guilty of any wrongdoing. Quite the thought, so I’ll have to see if that works with the IRS on my taxes next year.
Consumer & Operator Impacts
Luckily, the case for consumers won’t be so combative, as they’ll need to go the legal route with licensed casinos and sportsbooks if they are in states that offer that option. Additionally, the retail location option is available to plenty of people in legal states, as well as in neighboring ones.
Unfortunately, for the operators, it’s time to put up their dukes or agree to a set of guidelines that can be implemented nationwide. A lot of people have concerns about sweepstakes casinos, but if they can reach a compromise and make everyone feel better about the situation, there is a lot of money to be made in this industry.
What Lies Ahead for Sweepstakes Casinos
We are in a peculiar time in the online gambling era, as more states are coming around to the idea of a thriving community, as long as it’s regulated. It seems like the good-hearted nature has always been there in sweepstakes casinos, but not everyone sees it that way. And that’s why numerous states had to come in guns blazing with the cease-and-desist letters.
I remember the days when only an offshore account was available to bet on. Now, I have numerous operators in New Jersey and can’t imagine ever going back to the black market. I may not have every single one of them in my best interest, but I have reliable customer service departments and legal options at my disposal. That’s not always the case with sweepstakes casinos.
At the same time, I also understand that U.S. states want their piece of the pie, and this ultimately what a lot of these battles come down to. If it’s not that, the states are trying to create a safe space for their licensed casinos and sportsbooks.
