Kentucky Goes Hard with Crackdown on Sweepstakes Casino via Landmark Lawsuit Against Virtual Gaming Worlds
What’s Wrong with the Sweepstakes Casino Model?
Where do we begin?
For starters, sweepstakes models are not under U.S. state guidelines, meaning they can conduct their business however they see fit. Additionally, sweepstakes casinos do not generate any tax revenue in the states where they operate, leaving them open to considerable skepticism from the general public.
Some sweepstakes casino operators have been accused of having unreasonable odds and lengthy payout times, and this is where the real inquiries began.
The Case for Sweepstakes Models
Sweepstakes casinos use the dual-currency platform to stake their claim in the gambling market via Gold Coins and Sweeps Coins. The Gold Coins don’t hold any monetary value. Still, the Sweeps Coins can be purchased with real money and have a fully redeemable trade-in value for real money, cryptocurrency withdrawals, gift cards, or merchandise.
Many of the games found on legal sites, like sports betting and casino offerings, are live on sweepstakes casinos.
The model for sweepstakes casinos has worked before, and some states allow it. Just recently, Oklahoma Governor Kevin Stitt had a bill on his desk to be signed that would have banned all platforms in the state. However, Stitt vetoed the bill at the last minute, claiming that there wasn’t enough evidence to calculate exactly how detrimental they were.
But it should be noted that Oklahoma is a rare case, as 13 U.S. states have already banned sweepstakes casino platforms. Currently, sweepstakes casinos are allowed in over 30 U.S. states, but the number is dwindling as more states catch on.
Why Did Virtual Gaming World Get Targeted?
Australian-based Virtual Gaming World (VGW) was the catalyst for bringing sweepstakes casinos to the forefront in the United States. This model was scaled aggressively across the country, landing in many states that don’t have legalized online sports betting and/or iGaming.
With VGW being the biggest name in the business, they were certainly expected to get more negative attention than any other company. And the state of Kentucky did not hold up, coming in a variety of ways.
Kentucky’s Allegations: “New Technology, Same Old Scheme”
Kentucky’s case against VGW comes from several angles, giving it a better chance of establishing a coherent argument.
The KRS Chapter 528 defines gambling as “staking something of value on a game of chance with the potential to win value.” Here, Kentucky argued that purchases of Sweeps Coins determine just that, and they do. If customers are purchasing Sweeps Coins, it is essentially the same thing as wagering real money, like in gambling.
With the Kentucky Consumer Protection Act, this accused VGW of “unfair and deceptive practices by marketing their sites as free or social entertainment while heavily promoting paid entries.” Basically, VGW's true hope was for customers to spend their own money, not necessarily to bank on players using Gold Coins for free play.
The Loss Recovery Act (KRS Chapter 372, or the Recovery of Monies Lost Gambling Act) is a civil statute that allows Kentucky residents to recover gambling losses. In an odd circumstance, this statute does not apply to “legal, authorized, or regulated gambling” in Kentucky.
What is Kentucky Seeking?
Kentucky has been up front about its specific asks, which include:
- A permanent injunction banning VGW from operating sweepstakes casinos in Kentucky.
- Recovery for money that Kentucky residents lost
- Civil penalties, equitable relief, and disgorgement of profits (legal action where the wrongdoer would have to cough up any money from illegal or unethical actions.
At the end of the day, Kentucky is looking to be the sheriff in town. The state already has numerous ways for residents to get in on the action, so closing down sweepstakes casinos once and for all would be a nice feather in its cap. This is the home of horse racing, and a big push towards the finish line is just what they’re looking for.
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What Happens Next in Kentucky?
This case is still in its earliest stages, meaning that VGW will likely file a response and challenge the claims, arguing that its dual-currency model is legal under current laws and that it is not running an illegal gambling operation.
VGW has publicly stated they’ll be “vigorously defending” the case, so we can probably expect them to file a motion to dismiss the case.
For now, Kentucky residents will still be able to play all of their favorite sweepstakes casino games. However, there’s a potentially long wait that could keep Kentucky in a state of flux, with no one really knowing what’s going on.
What Happens Next Nationally?
The most interesting aspect of this case is whether additional U.S. states will take the same steps that Kentucky did. There is a huge national interest in the Kentucky case, given how many states have already legalized online sports betting, and the significance for legalized iGaming is certainly there as well.
We have seen plenty of states appear poised to legalize iGaming, but a good number of them haven’t crossed the finish line just yet. Not to mention, the window for legal sessions has closed in most U.S. states for 2026, so a minimum wait time of six months is what everyone is facing.
It’s no secret that U.S. states have been looking to end sweepstakes casinos for quite some time now, and all eyes are on Kentucky to see what happens there.
Conclusion: A Turning Point for Online Gambling?
The ongoing battle between U.S. states and sweepstakes casinos is nearing its end. For years, the two sides have been making their respective cases, and Kentucky’s latest push is one that the eyes of the gaming world will be glued to.
Sweepstakes casinos have enjoyed their time in the sun, but more U.S. states are starting to close the loopholes that have been previously accepted. It has been almost an entire decade since sweepstakes casinos first came on the scene, and it makes you wonder what took so long for these states to catch on.
I feel like 2027 is going to be a legendary year for solving this major problem. And it’s mainly a problem for U.S. states, not necessarily the sweepstakes casinos. The United States is inching closer to having sports betting fully available and legal in almost 40 states, and legal iGaming in almost 10 states.
In my humble opinion, legal gambling should be allowed in all 50 U.S. states, but we’re seeing the technology far outpace the legal ramifications across the country.
Gambling needs some form of oversight or committee to ensure the playing field is level. Sweepstakes casinos have skirted by more than a few rules in their day, and we’re finally seeing the other side of the coin.
