Sweepstakes casinos have responded to state cease-and-desist orders by leaving or restricting play, not by suing regulators. As Kentucky and Florida file lawsuits instead of sending letters, operators are being pulled into court as defendants.
The pattern stands out because other gambling-adjacent industries have gone to court over similar orders. Polymarket US sued Ohio on October 16 over a cease-and-desist letter. Sweepstakes operators have not publicly taken that route, and their trade group has not explained why.
Back in October 2025, no cease-and-desist order sent to a sweepstakes operator had been challenged in court. Attorney Daniel Wallach, a critic of the sweepstakes model, said at the time that more than 100 such orders had gone unchallenged. One year later, nothing has changed despite over a dozen states prioritizing legal action against sweeps casinos.
Social Gaming Leadership Alliance executive director Jeff Duncan declined to address the question of why sweeps casinos weren’t fighting back, as prediction markets are now, citing proprietary and legal issues. The group did not answer a later request for comment. Possible reasons have been floated by analysts, including the burden of overturning an agency order and legal costs.
Operators have generally complied. The New York attorney general’s office said a June 2025 cease-and-desist letter led VGW to stop offering virtual coin gambling in the state. VGW later agreed to an $8 million settlement, which the company said was not an admission of liability.
The Michigan Gaming Control Board announced on October 8 that it sent cease-and-desist letters to 33 offshore operators offering casino games, sweepstakes-style games or sports betting. The board did not say which recipients run sweepstakes games. The Illinois Gaming Board sent letters to more than 60 operators in March, followed by exits and restrictions.
Tennessee’s attorney general issued orders to about 40 operators in December 2025, and the state later enacted SB 2136. Iowa’s SF 2289 now lets its gaming commission issue cease-and-desist orders and seek injunctions.
Pennsylvania’s regulator told lawmakers in 2025 that it had sent 18 letters and that all recipients complied, but that it lacked authority to take legal action. Pending House Bill 2801 would give the Gaming Control Board and attorney general power to issue cease-and-desist orders and investigate violations.
Kentucky Attorney General Russell Coleman sued VGW in June without first sending a cease-and-desist letter. Florida Attorney General James Uthmeier filed separate suits against VGW and Stake.us on August 19. They also name payment processors and seek injunctions, restitution and civil penalties.
The approach is forcing operators to fight or leave. VGW said it rejects Kentucky’s claims and plans to defend the case. The complaints are allegations, and neither state has obtained a final ruling.
Prediction market firms such as Kalshi and Polymarket cite federal commodities law as a reason state gambling rules should not apply. On September 25, the Sixth Circuit rejected that argument for Kalshi in Ohio and Tennessee.
Sweepstakes operators rely on a different position. They say gold coins have no cash value and sweeps coins cannot be bought, so their games are not gambling. Regulators in several states disagree, and new laws in Oklahoma, Louisiana and Indiana address the model directly. Time will tell if sweeps casinos continue to adjust or if they make a bigger effort in court as deadlines near.
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