The shrinking map: how sweepstakes operators are surviving the state-by-state bans 

Two years ago, dual-currency sweepstakes operated in roughly 45 US states with little resistance. That map is now visibly smaller, and it keeps shrinking. Bans have arrived, enforcement has hardened, and the courts have joined in.

Here, Denis Kosinsky, chief product officer at NuxGame, explains what has actually changed, and why the operators still standing are the ones who treated compliance as a product decision rather than a legal one.

EGR: From 45 states to a shrinking map – what changed? 

Denis Kosinsky (DK): The model itself did not change. The tolerance for it did. For years, the dual-currency structure sat in a comfortable gap. It was not quite gambling, not quite a game, and nobody had the appetite to define it. That gap is closing state by state. California’s full ban took effect on 1 January 2026, and it is the clearest example of the new approach. It does not only target operators – it extends criminal liability to payment processors, geolocation vendors and media affiliates.

That is the part operators keep missing. Compliance used to stop at your own front door. Now your payment partner, your geolocation vendor and your affiliate network are all inside the perimeter with you, and any of them can be the reason you have a problem. You can run a clean operation and still get pulled into a case because of a decision someone three steps down your stack made. 

EGR: Why are the bans accelerating now? 

DK: Three forces are pushing in the same direction, and they reinforce each other. The first is the dual-currency model itself. Regulators looked at it closely and concluded that if a player can convert winnings into cash, the label on the coin does not matter much.

The second is criminal liability. Earlier action came as cease-and-desist letters – annoying, but survivable. When Illinois ordered 65 operators to block residents, most simply absorbed the letter and kept going. What is changing is the move to criminal statutes. Louisiana has made operating a sweepstakes casino a racketeering offence, with penalties measured in decades, not fines. In Tennessee, pressure from the state attorney general drove major operators out before any ban became law. You can weigh a cease-and-desist and take your chances. A racketeering charge is not something you negotiate around.

The third, and the one operators underestimate most, is civil litigation. More than 100 class actions are now active across the country. Those cases do not wait for a regulator to act, they do not care about your licensing plans, and they cost real money regardless of outcome. Legal exposure, not regulatory risk, is now the main cost driver in this market.

Think of it as three separate leaks in the same boat. Any one of them is manageable. All three at once will sink you unless you have already started fixing them.

EGR: So what do the surviving operators do differently?

DK: They build for exit before they need one. The biggest mistake we see is a rigid technical stack with no fast geo-blocking and no state-level kill switch. When a ban lands, those operators have two choices: keep serving a banned state and hope nobody notices, or shut down and rebuild manually over weeks. Neither is a strategy.

The way out of that is to build the blocking into the platform itself. A compliance manager should be able to switch a state off from the back office in an afternoon, without filing a ticket and waiting for the next development sprint. When we work with a client as their sweepstakes casino software provider, the state-level kill switch goes in early. Nobody expects a ban tomorrow. But building that switch while a deadline is running is how you end up shipping it badly, or late, or both. That gets you out fast. But speed is only half of it. How you leave matters just as much. Pay people what they are owed, tell them what is happening, and close the door properly. Operators who cut corners on the way out give the next state a ready-made argument for banning them. 

And there is a longer game most people are lazy about: the move to a regulated model. They assume the sweeps business converts neatly – same players, same games, new licence. It does not. Your player database was built on the light identity checks sweepstakes sites use, which will not meet a licensed casino’s KYC requirements. Part of your content library is not certified for regulated markets. None of this is quick, which is why it has to start while US revenue is still funding it (not after the bans have cut that revenue off). 

EGR: Many operators still concentrate most of their revenue in a handful of big states. Is that still viable? 

DK: No, and it is the position I worry about most. When two states carry most of your revenue, a ban in either one does not dent the business. It takes out a chunk you cannot replace, and you find that out on the day it happens. This is why revenue diversification has now become a survival plan.

Diversification goes beyond adding another state. It means running more than one type of business at once. An operator with US sweepstakes on one side and a licensed product in another market on the other has something to fall back on. An operator with everything in one country, under one legal argument, has nothing. 

EGR: Where should operators be looking next? 

DK: At what the legislatures are working on. By the time a ban is announced, your window to prepare has already closed. The useful work happens earlier, watching where the pressure is building. Right now that means legislative or regulatory activity in Florida, Texas, Ohio, Georgia, Virginia, North Carolina and Arizona. Not all of those will produce bans, but each one is a signal about direction.

The operators who do this well treat legislative tracking like they treat any other data feed. They know their revenue exposure per state, they know which states are moving, and they have a pre-agreed plan for each. When something lands, they execute a decision they already made calmly, weeks earlier. Plan the exit before the ban arrives, not after.

EGR: A final word for operators reading this in the middle of the shakeout? 

DK: A shrinking map does not remove the demand. Players in restrictive states still want this style of entertainment, and that demand will find a legal home – as a licensed online casino, a regulated hybrid model, or something we have not named yet. The question is which operators are still around and flexible enough to be there when it does.

Operators who want to survive this need to move fast: block a state in an afternoon, exit cleanly, and turn the same players and the same content into a compliant product somewhere else. Build for the exit, and you will still be here for the reopening.

Denis Kosinsky is the chief product officer (CPO) at NuxGame. He oversees platform strategy, product development, and advanced technology solutions. Kosinsky works with AI features, gamification tools and Web3 integrations to help operators launch and grow strong igaming businesses worldwide.