Tennessee legislation targets sweepstakes casino operations

• Tennessee lawmakers have introduced House Bill 1885, seeking to ban sweepstakes-style casino operations statewide.
• The legislation would classify sweepstakes casinos as illegal gambling under the Tennessee Consumer Protection Act, with penalties up to $15,000 per violation.
• The proposal follows Attorney General cease-and-desist letters to nearly 40 operators in December 2025.

Tennessee lawmakers have introduced legislation seeking to eliminate sweepstakes-style casino operations that have proliferated across the state.

House Bill 1885, introduced by Representative Scott Cepicky, would close legal ambiguities permitting businesses to operate gambling-style machines under sweepstakes promotion classifications.

Legislative framework

The measure would treat sweepstakes casinos as illegal online gambling under the Tennessee Consumer Protection Act of 1977. This classification would enable civil enforcement, financial penalties, and broader oversight beyond traditional gambling statutes.

Each violation could carry civil fines up to $15,000.

The bill expands sports wagering council authority to investigate unlawful gaming and grants additional investigative powers to the attorney general. The legislation provides mechanisms for state and local law enforcement to seize gambling devices and pursue charges against violators.

Property owners who knowingly lease space to prohibited sweepstakes operations could face penalties, creating additional pressure to eliminate the businesses.

Recent enforcement actions

In December 2025, Attorney General Jonathan Skrmetti issued cease-and-desist letters to nearly 40 sweepstakes casino operators. Several platforms exited the Tennessee market following those notices.

HB 1885 would transform that enforcement approach into formal statute, providing clearer legal authority for closing operations in grey areas of Tennessee law.

Recent state actions include:

• Indiana’s committee approval of a sweepstakes casino ban,
• Maine’s dual-currency law to prohibit sweepstakes operations,
• New York’s official ban on sweepstakes casinos, and
• California’s governor signing anti-sweepstakes legislation.

Sweepstakes business model

Sweepstakes casinos operate through a dual-currency system designed to circumvent gambling laws. Players purchase “gold coins” for entertainment, which cannot be redeemed for cash. Alongside this purchase, operators provide “sweepstakes coins” as a promotional bonus at no additional charge.

The key distinction: gold coins are for entertainment only, whilst sweepstakes coins can be converted into real money when players accumulate winnings. A typical transaction involves purchasing $10 worth of gold coins and receiving 5 sweepstakes coins as a “free bonus.”

To maintain legal positioning, operators must offer free methods of obtaining sweepstakes coins, such as mail-in requests. Players can theoretically participate without spending money, though the vast majority purchase gold coin packages. Once players have sweepstakes coins, they wager them on games resembling casino slots and table games.

Operators defend this model as compliant with Tennessee law, arguing operations constitute promotional sweepstakes rather than prohibited gambling. The ambiguity stems from sweepstakes being generally exempt from gambling prohibitions when no purchase is required for entry.

National pattern

Tennessee action fits within a wider national trend.

States including California, Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, West Virginia, Ohio, Florida, and North Carolina have enacted legislation or introduced bills targeting sweepstakes casinos over concerns about unlicensed gambling disguised through promotional currency systems.

Tennessee legalised online sports betting in 2019, becoming one of the first states to permit mobile wagering without retail sportsbooks. The market has generated substantial tax revenue with a 20% tax on adjusted gross revenue.

Tennessee currently permits limited gambling forms including a state lottery, online sports betting, and charitable bingo. The state does not allow commercial casinos, though it permits tribal gaming at one facility operated by the Eastern Band of Cherokee Indians.

Industry response

Sweepstakes operators have opposed the ban, arguing operations provide entertainment and economic benefits. They suggest Tennessee should establish a regulatory framework instead of prohibition.

Opponents argue sweepstakes cafés disproportionately target vulnerable populations, lack responsible gambling protections, and generate social costs without providing regulatory oversight or tax revenue. Court cases across the United States have produced mixed rulings on sweepstakes operations’ legality.

If enacted, sweepstakes café operators would need to close Tennessee locations or restructure business models to eliminate gambling-style elements. The legislation reinforces Tennessee’s selective gambling boundaries, permitting mobile sports wagering that generates substantial tax revenue whilst maintaining prohibitions on unregulated casino-style operations.