Tennessee Cracks Down on Online Sweepstakes Casinos

Tennessee is taking decisive steps to curb the rise of online sweepstakes casinos, marking a significant shift in the state’s approach to gambling regulation. The introduction of House Bill 1885, led by Rep. Scott Cepicky, seeks to clarify that these online platforms are not legitimate forms of entertainment, but rather unlawful gambling activities disguised under the guise of free-to-play sweepstakes.

Defining Sweepstakes Casinos and Dual-Currency Models

The newly proposed bill seeks to address the growing concerns surrounding dual-currency systems used by online sweepstakes casinos. These platforms, which have gained popularity for offering games similar to those found in traditional casinos, often operate under the pretense of providing free entertainment. However, Tennessee’s bill asserts that these operations are essentially camouflaged gambling, allowing users to engage in real-money gambling by purchasing virtual currency.

Rep. Cepicky’s bill argues that these sweepstakes casinos, which may resemble legal gambling games like slot machines, video poker, or bingo, violate state laws. According to HB 1885, the dual-currency mechanism—where players buy, receive as bonuses, or earn virtual currency—functions as a loophole, enabling gambling under false pretenses. The law would allow the state’s attorney general to take stronger action against operators who promote such platforms, ensuring greater enforcement of Tennessee’s gambling and consumer protection laws.

Wider Enforcement Efforts and State-Level Trend

Tennessee’s efforts are part of a broader trend observed across the United States in 2026, as several other states have also introduced legislation or ramped up enforcement against online sweepstakes platforms. Maine, Florida, Indiana, and Iowa, among others, are tackling the growing issue of these virtual currency systems, which many state regulators view as an attempt to bypass traditional gambling regulations.

Prior to the official passage of HB 1885, Tennessee had already begun cracking down on these operations. Since November, over 30 sweepstakes platforms—including Chumba, Modo, and Stake—have been exiting the state. Observers speculate that Tennessee regulators, including Attorney General Jonathan Skrmetti, may have played a significant role in this exodus.

By December, Skrmetti’s office had issued cease-and-desist letters to nearly 40 online sweepstakes operators, successfully halting the operation of multiple illegal platforms in Tennessee. In his statement, Skrmetti emphasized that these companies were using the dual-currency model as a "façade" for real-money gambling. The letters resulted in either the removal of the sweepstakes components or the full cessation of operations within Tennessee.

Utah’s Legislative Response

While Tennessee moves forward with stricter measures, Utah has also responded to the rise of unregulated gambling platforms. Senate Bill 38, which strengthens consumer protections related to prize promotions and automatic renewal contracts, indirectly targets these online sweepstakes platforms. Though it doesn’t explicitly address sweepstakes casinos, the bill addresses concerns around virtual currency and promotional credits used to obscure real-money gambling.

Utah’s swift passage of this bill reflects the growing trend of using consumer protection laws to regulate unlicensed gambling activities, rather than relying on traditional gaming regulations. This shift highlights the increasing concern over the impact of virtual currencies and dual-wallet systems, which have been linked to the rise of online sweepstakes casinos.

Source:

Tennessee Strengthens Crackdown on Online Sweepstakes Casinos, realmoneyaction.com, January 23, 2026