In an important move affecting the online gaming industry, New York’s legislature has passed a bill aimed at banning online sweepstakes casinos, now awaiting a decision from Governor Kathy Hochul. The pending legislation could redefine one of the industry’s major grey-market areas. Senate Bill 5935, spearheaded by Joseph Addabbo, Chair of the Racing, Gaming and Wagering Committee, successfully passed through both legislative chambers earlier this year and was officially sent to the governor’s office this week. Governor Hochul has until December 31 to sign, veto, or allow the bill to become law without her signature.
The bill, if enacted, would eliminate the dual-currency system currently used by many New York sweepstakes casinos. These platforms typically operate using two types of virtual currency—such as entertainment-only Gold Coins and Sweeps Coins redeemable for cash. SB 5935 specifically targets this model, seeking to ban online sweepstakes games that let players convert one type of virtual currency into cash or cash-equivalent prizes.
Addabbo has characterized the bill as essential to regulating New York’s online gaming environment. He voiced concerns earlier this year, stating that online sweepstakes casinos closely resemble traditional casino games but operate without regulation. The goal is to eliminate these unregulated gaming sites in New York.
The proposed legislation extends beyond operators, empowering the New York State Gaming Commission and the Attorney General to hold payment providers, content suppliers, and affiliates accountable if they knowingly support prohibited sweepstakes gaming, broadening the scope of liability.
Throughout 2025, New York has intensified efforts to regulate this sector. In June, Attorney General Letitia James initiated legal action against 26 online casinos offering games using virtual sweepstakes coins exchangeable for cash or prizes. This highlighted a regulatory blind spot, as these sites argue they are merely running promotions since players do not directly purchase the redeemable currency. SB 5935 aims to address this loophole by focusing on the economic impact of dual-currency systems rather than their promotional claims.
Should the bill be enacted, authorities would be empowered to demand operators exit the New York market, pressure financial institutions to block related payments, and pursue civil action against violators. Additionally, the bill includes provisions for seizing revenue from illegal operations, echoing previous anti-offshore enforcement efforts.
The implications for operators, suppliers, and affiliates involved in sweepstakes casinos in New York would be significant and immediate. Platforms would need to cease offering any products converting virtual entertainment into cashable rewards via a dual-currency system. Some operators might transition to purely social casino models without cash-out options, yet this would mean sacrificing a crucial monetization aspect. Others may opt to geoblock New York, concentrating efforts on states with more lenient regulations.
The bill also poses significant challenges for the ecosystem’s peripheral companies. Payment processors, game developers, and affiliate networks that continue partnerships with non-compliant brands could face enforcement risks. Legal experts note that a similar legal framework in California’s AB 831 has already caused some suppliers to cut ties with sweepstakes operators ahead of its enforcement in January 2026.
Some industry players might preemptively exit New York rather than await formal actions, especially if financial institutions tighten their policies in anticipation of the bill’s potential passage.
Trade groups within the sweepstakes sector have mounted vigorous opposition to SB 5935. The Social Gaming Leadership Alliance critiqued the bill as “rushed and flawed,” claiming it conflates legitimate sweepstakes promotions with unregulated casinos and could eliminate an entire business model instead of targeting specific bad actors. The group advocates for a veto and calls for discussions around a licensing or registration framework.
Conversely, consumer protection advocates and some traditional gambling operators endorse the bill. They argue that dual-currency sites directly compete with regulated offerings without comparable taxation or adherence to standards such as age verification, anti-money laundering protocols, and responsible gaming tools.
New York’s potential actions are not isolated. Should SB 5935 become law, the state would join others, like California, moving against dual-currency sweepstakes casinos. California’s AB 831 ban comes into force on January 1, 2026, while states such as Montana, Connecticut, and New Jersey have already banned the model.
Together, New York and California represent the largest U.S. markets for sweepstakes gaming, and losing access to both would prompt operators to reassess the model’s sustainability in the U.S.
Governor Hochul has three procedural options: sign SB 5935, veto it, or take no action, which would allow it to become law by default after December 31. If the bill becomes law, enforcement will be led by the Gaming Commission and Attorney General. Sweepstakes casinos must then decide whether to adapt, fight the law in court, or abandon New York altogether.
Sending the bill to the governor signals New York’s stance that dual-currency casinos represent unlicensed gambling, and the state is ready to regulate them accordingly.
James Miller is a distinguished casino strategy expert with a wealth of experience in the gambling world. At CasinoNoDeposits.com, James focuses on crafting effective gaming strategies and providing insightful reviews to guide players towards making informed decisions. His deep understanding of casino mechanics and promotional offers makes him a valuable asset to the team. Dedicated to educating players, James ensures that every piece of content is accurate, actionable, and reader-friendly.
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