Online Gambling Legal Disputes Unveil Complication in Adjudicating Internet-Based Lotteries Operating as Casinos
In the ever-evolving landscape of online gaming, the legal status of offshore sweepstakes casinos in the United States remains a contentious issue, heavily regulated at the state level following the VGW Holdings Limited case.
Despite no comprehensive federal ban on offshore online casinos, these platforms operate outside U.S. jurisdiction and federal law does not explicitly prohibit U.S. residents from playing on them. However, their legality largely depends on individual state laws and enforcement actions.
Following the VGW Holdings Limited case, state regulators have intensified their regulatory scrutiny and enforcement actions against sweepstakes casinos, often targeting those that are unlicensed or operate in ways deemed to violate state gambling laws. Multiple states have issued cease-and-desist orders, initiated lawsuits, or passed legislation restricting or banning sweepstakes-style online casinos.
Key states taking action include Michigan, Maryland, Connecticut, New York, Louisiana, West Virginia, Pennsylvania, Arizona, Florida, Nevada, New Jersey, and Missouri. For instance, Connecticut enacted a law effective October 2025 banning online sweepstakes casinos, reflecting a trending legal tightening across jurisdictions.
In New York, the Attorney General's office emphasized that betting cash-redeemable virtual coins on chance games constitutes illegal gambling, regardless of how sweepstakes operators characterize their models. Meanwhile, Louisiana issued a legal opinion declaring online sweepstakes-style casino businesses to be in violation of state law.
Sweepstakes casinos often maintain their legality by eliminating an element of a traditional lottery (usually consideration), such as by giving away sweepstakes coins for free instead of selling them. This model remains legal in many states but faces increasing challenges from regulators and courts.
The current legal standoff was evident in the case of VGW Holdings Limited and its subsidiaries, which were sued by several plaintiffs who claimed they had gambled and lost money on VGW's online sweepstakes casinos for four years. Judge Thomas Thrash ruled that the court lacked jurisdiction over VGW, determining that the defendants lacked personal jurisdiction over the company and that applying the Georgia Code to overseas businesses presents problems.
VGW operates several online gaming platforms that are labeled as social sweepstakes casinos. The company is also registered as a corporation in Delaware and is based in Malta. Despite pulling its online gaming operations in certain states after receiving warnings, the environment has grown more hostile with significant state-level crackdowns and legislative bans unfolding in 2025, indicating increasing legal risk for operators and uncertainty for players.
As of December 19, 2024, and last updated on June 23, 2025, this article provides a snapshot of the ongoing debate and regulatory environment surrounding offshore sweepstakes casinos in the United States. The legal status of these platforms continues to evolve, and players and operators should stay informed about the latest developments in their respective states.
| Aspect | Status | |-----------------------------|-----------------------------------------------| | Federal law | No explicit federal prohibition on offshore online casinos | | Offshore casinos | Legal to operate offshore; U.S. states may regulate or restrict | | Sweepstakes casinos | Legal model in many states if no consideration involved; under increasing state regulatory pressure | | Post-VGW Holdings | States have escalated enforcement and enacted restrictive laws reflecting more aggressive stance on unlicensed/unregulated sweepstakes operators | | Key states taking action | MI, MD, CT, NY, LA, WV, NJ, FL, PA, AZ, NV, MO and others |
- VGW Holdings Limited operates several online gaming platforms that are labeled as social sweepstakes casinos, such as Luckland and Luckyland Slots.
- Despite no comprehensive federal ban on offshore online casinos, social casinos like Sweeps Coins Casino and Big Village find themselves at the forefront of a legal standoff, with some states, like Connecticut and Louisiana, declaring their operations in violation of state law.
- In the sweeping crackdown on unlicensed and unregulated sweepstakes-style online casinos, key states like New York and Nevada have taken drastic measures, such as passing legislation or issuing cease-and-desist orders, that aim to curb the spread of these platforms.
- Compared to traditional lotteries, social casinos like Chumba Casino and Global Poker use a model that eliminates consideration, often through the distribution of free play coins, to maintain their legality in many states.
- In the social gaming landscape, tech companies like Social Gaming Network and Virtual Goods World (VGW) are pushing the boundaries of technology and law, navigating the murky waters of federal, state, and local regulations surrounding offshore gaming and sweepstakes in the United States.
