Sweepstakes casinos are under siege in the US market, and it doesn't appear that there will be any let-up in this assault in the near future. In fact, the most prominent market research firm in the gaming industry is projecting nothing but more pain ahead for US sweepstakes casino operators.
Eilers & Krejcik Gaming, LLC, a boutique research and consulting firm specializing in serving the global gaming industry, is forecasting significant revenue declines for US sweepstakes casinos over the next two years.
A study conducted by the firm is revising its net revenue projections for the US sweepstakes casino industry from $4.7 billion to $4 billion by the end of 2025. The positive news is that it would still be a 16% year-over-year increase above 2024 net revenues. However, the bad news is that the original projections were for a 36% increase.
The news gets even worse when looking at the 2026 projections from Eilers & Krejcik. The company is forecasting a net revenue dip to $3.6 billion next year. That would be a further 10% decline.
A breakdown of the analysis on the company's Substack newsletter is headlined: Has Sweeps Peaked?
According to the report, this downtick in sweepstakes casino net revenue is being driven by a variety of regulatory and operational headwinds. These include operator departures from several states, the most notable departure being New York. There have also been pullbacks on marketing spend in states like California due to a looming ban on sweepstakes casinos there.
Increasing customer acquisition costs are also playing a role in the revenue downturn. As more sweepstakes casinos launch, operators are competing for a share of what is becoming a shrinking market.
The projections for a further 10% year-over-year decline in sweepstakes casino net revenue are based on the assumption that operators will be departing from California. This loss of revenue could be partially offset by anticipated growth in states unimpacted by pressure to ban sweepstakes casinos.
Eilers & Krejcik offer a bear case of a 30% decline to $2.8 billion and a bull case of a 14% increase to $4.55 billion in sweepstakes casino net revenue. This wide-ranging disparity in outcomes is related to the uncertainty being created by potential regulatory developments in the industry.
In full disclosure, Eilers & Krejcik analysts readily admit that the bull case in this scenario is increasingly unlikely to happen. California is on the brink of passing Bill AB 831 into law. This would make all sweepstakes casinos illegal in California, the most populous state in the US.
The California State Assembly voted 63-0 in favor of the bill. At every stage of passage, the vote to move forward with the bill has been unanimous. The bill now goes to the desk of California Governor Gavin Newsom. All he needs to do is sign it, and the bill becomes law. Newsom has 12 days (excluding Sundays) to decide whether to sign the bill, veto the bill, or not act on it at all.
If Newsom signs AB 831, it becomes law on January 1, 2026.
Along with New York, New Jersey, Montana, Michigan, and Connecticut have also banned sweepstakes casinos. Several other states are also taking action of some sort against sweepstakes casinos. These steps include issuing cease and desist orders, sending warnings to residents, and strengthening the legal penalties for anyone participating in unlicensed gambling.
Among the states currently considering taking action against sweepstakes casino operators are Arizona, Maine, Louisiana, Ohio, Mississippi, Nevada, and Pennsylvania.
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