Tennessee cracks down on online sweepstakes casinos, bill would ban dual-currency gambling
Tennessee Attorney General issued cease-and-desist orders to nearly 40 online sweepstakes casinos deemed illegal, and lawmakers introduced HB 1885 to formally outlaw such dual-currency gaming platforms in state law.
Nashville, TN — Tennessee has emerged as a key battleground in the nationwide effort to curtail online sweepstakes casinos, platforms that use “dual-currency” systems to simulate casino-style gambling without licensing.
In late 2025, the Tennessee Attorney General’s Office took aggressive legal action to force operators out of the state, and in January 2026, lawmakers introduced a bill to codify a statewide ban on these controversial platforms.
Attorney General Targets Illegal Sweepstakes Casinos with Cease-and-Desist Orders
On December 29, 2025, Tennessee Attorney General Jonathan Skrmetti announced that his office had sent formal cease-and-desist letters to nearly 40 online sweepstakes casino operators for offering unlawful gambling products to Tennessee residents.
Regulators found that these websites, many using a two-currency model in which one currency could be redeemed for cash or prizes, were effectively operating real-money gambling disguised as promotional sweepstakes, which the state says constitute an illegal lottery under the Tennessee Constitution.
The cease-and-desist campaign targeted a wide array of brands, including Chumba, High 5 Casino, Stake, Global Poker, Luckyland, and others, with platforms either disabling their sweepstakes features or agreeing to wind down operations entirely in Tennessee.
This enforcement wave reflects a broader concern that the “dual-currency” setup is a façade for real gambling that avoids oversight, consumer protections, and fairness guarantees.
“The only thing you can be sure about with an online sweepstakes casino is that it’s going to take your money,” Skrmetti said, emphasizing that such sites avoid the oversight and safeguards required of licensed gaming operators.
HB 1885: Legislators Move to Ban Sweepstakes Casinos in State Law
Building on this enforcement momentum, Tennessee lawmakers introduced House Bill 1885 in January 2026. Sponsored by Representative Scott Cepicky, the bill would explicitly outlaw online sweepstakes casinos and give the state clearer statutory authority to regulate and shut down dual-currency gaming platforms.
Key provisions of HB 1885 include:
- Definition of “Online Sweepstakes Games”: The bill defines sweepstakes casinos as those that use virtual currency systems in which players buy or earn currency that can later be redeemed for prizes or cash equivalents, effectively capturing the dual-currency model that Skrmetti’s office targeted in enforcement.
- Unlawful Conduct: Operating, promoting, or facilitating online sweepstakes games would be declared unlawful under state law and deemed detrimental to public health, safety, and welfare.
- Broad Scope: The definition covers casino-style gaming such as slots, table games, poker, bingo or unlicensed sports wagering offered via sweepstakes platforms.
- Civil Enforcement Tools: Violations could be treated as unfair or deceptive practices under Tennessee’s Consumer Protection Act, exposing operators and affiliates to injunctive relief and civil penalties rather than relying solely on criminal gambling statutes.
By codifying a prohibition and a clearer legal framework, the bill aims to go beyond tactical enforcement and create long-term deterrence for sweepstakes casino models that have proliferated in recent years.
How Tennessee Fits Into a National Trend
Tennessee’s actions are part of a broader multi-state crackdown on sweepstakes casino models that emerged in 2024–2025.
Regulators and legislators in states such as California, New York, Connecticut, New Jersey, and Montana have already banned or taken action against dual-currency platforms, while others, including Florida, Indiana, Maine, Iowa, and Mississippi, have introduced sweeping prohibition bills in 2026.
Legal analysis notes that courts and regulators increasingly view sweepstakes platforms based on substance over form, focusing on whether a product functions as gambling rather than on “sweepstakes” branding.
In this view, if users pay for a currency that can influence outcomes and be redeemed for real money or prizes, the experience closely resembles unlawful gambling rather than a harmless promotion.
Industry Retreats and Compliance Responses
Even before the cease-and-desist letters were issued, many operators began withdrawing or scaling back offerings in Tennessee in late 2025, anticipating enforcement action.
Platforms such as Modo, High 5, and Stake announced phased exits or disabled cash-redeemable sweepstakes, leaving only entertainment-only game modes, such as “Gold Coins,” available to Tennessee users.
This drift illustrates how enforcement pressure, whether from Attorneys General, state gaming councils, or legislation, can prompt market participants to reevaluate risk and compliance costs without waiting for full judicial determinations.
Conclusion: Tougher Stance Signals Broader Change
Tennessee’s recent crackdown and proposed legislation underscore a major shift in how states are confronting unregulated online sweepstakes casinos, a long-standing legal grey area that no longer flies under regulators’ radar.
By combining immediate enforcement actions with statutory bans and civil enforcement tools, Tennessee is positioning itself at the forefront of the movement to close legal loopholes and protect consumers from predatory gambling disguised as social or promotional games.
For operators, payments partners, and online gaming platforms eyeing U.S. markets, the message is clear: regulatory scrutiny is increasing, and the sweepstakes loophole may soon disappear entirely in jurisdictions that once tolerated it.
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