e have seen dramatic evolution across the gaming industry throughout 2025. There have been noteworthy legal and regulatory developments for lottery couriers, prediction markets, sweepstakes casinos, and sports betting companies, among many others. The evolving legal landscape will affect operators, consumers, and policymakers.
Below, we summarize some of the important changes in the legal gaming landscape for the first half of 2025, from January 1 through June 30.
1. Sports Prediction Markets Continue to Grow
Sports-based events contracts allow participants to trade on binary outcomes of specific events. And in the first half of 2025, the regulatory framework regarding sports-based event contracts sparked significant interest and debate among market participants, regulatory bodies, and policymakers.
As one example, Kalshi’s landmark legal battles set critical precedents that shape the conversation around sports-based event contracts. In September 2024, the U.S. District Court for the District of Columbia ruled in favor of Kalshi, affirming that Congressional Control Contracts constituted permissible futures products rather than gaming.1 This decision highlighted the nuanced interpretation of terms such as “gaming” and “involve” under the Commodity Exchange Act and paved the way for expanded offerings in the event contracts space such as sports-based event contracts. For more on event contracts, see Matthew Kulkin and Alexandrea Rahill’s article, CFTC Regulation of Binary Event Contracts: A History.
Despite this, state authorities have expressed concerns over sports-based event contracts, with several issuing cease-and-desist orders, citing conflicts with state gaming laws. At the time of publication, several district courts and one appellate court are reviewing motions by event contract companies to block state regulators from enforcing gambling laws. Plaintiffs in those cases assert that any state actions would interfere with the exclusive authority of the Commodity Futures Trading Commission (CFTC) to regulate futures derivative contracts pursuant to the Federal Commodity Exchange Act.
The CFTC has yet to clarify its stance on sports-based event contracts. Some of this may be due to CFTC leadership continuing to transition under the Trump administration.2 Acting Chairman Caroline Pham has advocated for an open dialogue and a new framework for federal review of event contracts; however, she plans to depart once a new chair is confirmed.3 Meanwhile, nominee Brian Quintenz previously voiced support for congressional action, rather than CFTC action, to resolve potential conflicts with state gaming laws by clarifying the scope of events contracts through legislation.4 As legal challenges and regulatory uncertainty persist, the gaming industry awaits clear guidance that will determine the path forward for sports-based event contracts and related innovative products.
2. Sweepstakes and Social Casinos: Regulators, Legislatures, and Plaintiffs’ Bar Take Aim
Sweepstakes casino games are online or mobile games for entertainment, using a sweepstakes model. Players use free virtual currency earned through purchases, tasks, or referrals to play casino-style games (e.g., slots, poker, roulette, sports betting, bingo) that offer a chance to win real money or prizes.
Sweepstakes casino games have seen a tremendous increase in popularity and profitability, especially in locations that place strong limits on real-money online play. Proponents of sweepstakes casino games assert that the games do not fit the traditional definition of gambling because they lack the required element either of a “prize or thing of value to be won” or of “consideration” or paying a cost to enter. Most of the profit from social casino games comes from in-game purchases or advertising revenues; when a player views an ad, the player can earn some compensation that can be used in gaming and the gaming company earns the spread between that compensation and the amount charged for the advertisement (less applicable costs).
Sweepstakes casino games have come under intense scrutiny in recent years, and this trend has continued during the first half of 2025. In the first six months of 2025, state regulators in Connecticut, Delaware, Maryland, and Michigan sent cease-and-desist orders to sweepstakes casino operators; state legislatures in Montana, Connecticut, New Jersey, and Louisiana passed legislation prohibiting sweepstakes casino games; and private litigants filed class action suits against operators as well as their service providers. Each of these categories is summarized below.
Regulatory Actions
State regulators have increasingly exercised their authority to crack down on sweepstakes casinos, leveraging state anti-gambling laws to target unlicensed operators. Both gaming control boards and state attorneys general have actively issued cease-and-desist orders, initiated enforcement actions, and provided legal opinions regarding the legality of sweepstakes platforms. This coordinated scrutiny underscores a growing commitment among state officials to address the proliferation of unregulated gaming.
In February, the Michigan Gaming Control Board issued nine cease-and-desist letters for violations of state gaming laws to operators of “unlicensed online casinos.”5 Maryland’s gaming regulator, the Maryland Lottery and Gaming Control Agency, followed suit in March by sending cease-and-desist letters to sweepstakes casinos offering their games in the state.6
In addition, several state attorneys general took action against sweepstakes casino operators in the first half of 2025, further intensifying regulatory pressure on the industry. In May 2025, the Connecticut Department of Consumer Protection Gaming Division reached a $1.5 million settlement with a gaming company that offers online sweepstakes casino games as one of its products.7 In June, New York Attorney General Letitia James announced that she sent cease-and-desist orders to 26 online casinos, asserting that “betting cash-redeemable virtual coins on games of chance constitutes gambling, regardless of how the casino operator characterizes how players can obtain the virtual coins.”8 Louisiana Attorney General Liz Murrill likewise issued an opinion on July 2 stating that “it is the opinion of this office that online businesses offering casino-style games—purporting to be sweepstakes or social gaming platforms—are operating in violation of Louisiana law.”9 There have also been reports that West Virginia Attorney General JB McCuskey issued subpoenas to sweepstakes operators in February 2025.10
These actions across multiple states highlight a growing effort to further regulate and monitor online gambling activities.
Legislation
In tandem with regulatory enforcement, several state legislatures have enacted laws to criminalize or prohibit sweepstakes casino games. These laws aim to clarify legal status and strengthen enforcement tools with regard to sweepstakes casino games.
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