Stakester's Take

As of mid-2025, sweepstakes casinos are no longer legally available to players in New York. Recent legislation banning online sweepstakes platforms that use virtual currencies redeemable for cash has passed both legislative chambers and is expected to be signed into law soon. With strict penalties and active enforcement already underway, all sweepstakes casinos have exited the New York market, closing this previously legal avenue for online casino-style gaming in the state.

New York's Sweepstakes Casino Laws Explained

New York is on the brink of a sweeping change regarding online sweepstakes casinos. As of June 2025, both chambers of the state legislature have unanimously passed Senate Bill S5935A, which bans the operation and promotion of online sweepstakes casinos that use dual-currency systems, such as Gold Coins or Sweeps Coins, that can be exchanged for cash prizes or equivalents. The bill now awaits Governor Kathy Hochul’s signature, which is widely expected, and the law will take effect immediately upon her approval.

Key Updates:

Comprehensive Ban: The new law prohibits any online casino-style games, bingo, lottery, or sports betting platforms that use virtual currencies redeemable for cash or prizes. This directly targets the sweepstakes casino model that previously operated in a legal gray area.

Enforcement Actions: Even before the bill’s passage, New York Attorney General Letitia James issued cease-and-desist letters to 26 sweepstakes casino operators, resulting in all of them exiting the New York market.

Who Is Affected: The ban covers not only operators but also payment providers, geolocation services, gaming content suppliers, affiliates, and investors involved in these platforms.

Penalties: Violators face fines ranging from $10,000 to $100,000 per incident, with the possibility of losing existing gaming licenses.

Regulatory Oversight: The New York State Gaming Commission, State Police, and Attorney General are empowered to investigate and enforce the new law, including issuing cease-and-desist orders.

Sweepstakes casinos are no longer a legal option for New Yorkers to play casino-style games online. The state has moved decisively to close the legal loophole that allowed these platforms to operate with virtual currencies, and enforcement is already underway. Once Governor Hochul signs the bill, New York will have one of the strictest prohibitions on sweepstakes casinos in the country.

New York's Gambling Regulator

The New York State Gaming Commission regulates all gambling at all levels across the state.

Established in 2013, it is a unification of numerous state-run bodies that currently oversee casinos, lottery, horse racing, sports betting, and charitable gaming.

Known for its strict enforcement and overly cautious approach to online regulation. The body is responsible for regulating and the potential restriction of sweepstakes casinos. 

Responsible Gambling in New York

While the top New York sweepstake casino operators offer a strong variety of responsible gambling tools, they are not required to by law.

These measures can include:

• Offering players daily, weekly, or monthly spending limits.
• Voluntary self-exclusion - either through a casino's programme or from the New York State Gambling Commission directly.
• Parental controls and third-party software to prevent underage access.

The state of New York also offers access to problem gambling support in the form of resources, such as the National Council on Problem Gambling (NCPG) and the New York State HOPEline (1-877-8-HOPENY).

These are readily available on sweepstakes websites in New York; just navigate to any page's footer.

Tax Requirements at New York Sweepstakes Casinos

In New York, all sweepstakes redemptions are taxable at both the federal and state levels:

• Federal tax: 24% withholding on winnings over $5,000; all winnings must be reported as income.

• NY state tax: Graduated rates from 4% to 10.9% depending on total income.

Additional taxation may also be applied depending on locality. Most notably, NYC and Yonkers residents will be affected.

In the case of large wins, operators may withhold state taxes themselves. However, players are still responsible for accurate reporting and payment of taxes on all prizes and redemptions. They must report this on IRS Form W-2G and NY Form IT-201.

Latest New York Sweepstakes Casino Regulatory Changes

Senate Bill 5935 (S5935A): New York’s Senate and Assembly have both passed legislation banning online sweepstakes casinos. The Senate approved the bill 57-2, and the Assembly voted unanimously 141-0.

Bill Banning Sweepstakes Casinos: The bill is a direct ban on sweepstakes casinos, making it illegal for anyone, including operators, suppliers, payment processors, and investors, to operate or support these platforms in New York.

Ban Scope: The law prohibits the operation or promotion of online sweepstakes games that simulate casino-style games, bingo, lottery games, or sports betting using a dual-currency system where virtual coins can be exchanged for cash prizes or equivalents.

Penalties: Violators face fines ranging from $10,000 to $100,000 per incident and potential revocation of gaming licenses. Fines collected are directed to the Commercial Gaming Revenue Fund to support problem gambling education and treatment.

Enforcement: The New York State Gaming Commission, State Police, and Attorney General are empowered to investigate and issue cease-and-desist orders. The legislation also targets suppliers, payment processors, geolocation providers, and investors facilitating these platforms.

Enforcement Actions: Before the bill’s passage, Attorney General Letitia James sent cease-and-desist letters to 26 online sweepstakes platforms, all of which complied and ceased operations in New York.

Status: The bill now awaits Governor Kathy Hochul’s signature to become law. If signed, New York will join Connecticut and Montana as states explicitly banning such platforms.