What’s driving U.S. operators east? By Katherine A. Baker, Joshua L. Kirschner & Samantha Ahearn

The legal landscape for sweepstakes casinos in the United States is rapidly shifting, with an increasing number of states applying regulatory scrutiny, legislative restrictions or prohibitions. “Sweepstakes casino” is the colloquial term for gaming platforms where participants can obtain virtual currency to play casino-style or sports-prediction-style games for free, without having to make a purchase. Players can win real money or other prizes, under sweepstakes rather than gambling law.

Recently, several states have introduced laws banning or severely restricting them. Regulators are issuing cease-and-desist orders. State attorneys general are initiating lawsuits. And private citizens are launching class actions and individual claims. As a result, operators are looking to alternate markets.

katherine baker

Image: Katherine Baker, a Boston-based partner at Nelson Mullins Riley & Scarborough LLP and chair of the firm’s Gaming Industry Group, assists casino gaming, iGaming, sports betting, and fantasy sports operators, vendors, and entrepreneurs in navigating the state and federal commercial, and tribal-gaming landscape, including leveraging fintech solutions.

All the while, consumer demand persists. In fact, it’s surging. Interestingly, in the midst of growing legal scrutiny, online sweepstakes casinos have increased their player base at around three times the rate of real-money casinos. Consumers are drawn to the casual, low-barrier appeal of sweepstakes models, where play tokens can be earned for free and prizes redeemed. So U.S. sweepstakes operators are focusing on the majority of states where sweepstakes casinos remain permissible and looking farther afield to foreign markets – like Germany.

Why Germany? It is a particularly appealing destination for sweepstakes operators for a few reasons. First, there is a massive market potential. Germany is Europe’s largest economy, the host of cutting-edge gaming technology and has a significant appetite for online gaming. Revenue projections estimate that Germany’s gaming market will reach $226.9 billion at the end of 2025. Germany is also a leading innovator for technology in online gaming, providing consumers with cutting-edge online-gaming products.

Perhaps the most compelling factor is Germany’s relatively structured and predictable regulatory environment, especially when contrasted with the fragmented and inconsistent approach in the U.S. In 2021, Germany passed the Interstate Treaty on Gambling (the “Treaty”), which significantly changed the legal framework for online gambling in Germany. While still conservative, the Treaty liberalized previously restrictive laws. It replaced a near-total ban on online gambling with a framework designed to balance regulation, consumer protection and market access.

joshua kirschner

Image: Joshua Kirschner,an Atlanta-based attorney at Nelson Mullins Riley & Scarborough LLP, focuses his practice on the gaming and gambling sectors, and represents businesses and individuals in a wide variety of regulatory and white-collar litigation matters. A primary focus of his practice is assisting casino, iGaming, sports betting, and daily fantasy sports operators, vendors, and entrepreneurs to navigate the state, federal and tribal gaming landscapes

Sweepstakes do not fall neatly into the gambling definitions of the Treaty. It defines gambling similar to how most states in the U.S. define gambling, requiring three key elements: (1) a stake or monetary consideration; (2) an element of chance; (3) and a prize of monetary value. Sweepstakes casinos using a free or dual-currency model (e.g., “Gold Coins” for fun play and “Sweep Coins” for redeemable prizes), avoid the “stake” requirement by allowing users to play for free or obtain in-game currency without direct purchase. This creates the same unregulated, gray area that persists in the U.S.

But, unlike the U.S., Germany appears not to have signaled any desire to define the dual-currency model as a gambling stake or otherwise target online sweepstakes casinos. It is worth pointing out, however, that – either way –sweepstakes operators would still need to comply with other laws applicable to promotions, such as Germany’s Act Against Unfair Competition (UWG), General Data Protection Regulation (GDPR), and consumer protection and contract provisions of the German Civil Code (BGB).

samantha ahearn

Image:  Samantha Ahearn, a Boston-based attorney at Nelson Mullins Riley & Scarborough LLP, is a litigator who focuses her practice on complex commercial-litigation and business disputes, insurance disputes, labor and employment matters, internal investigations, and gaming regulation.

Even if Germany were to classify sweepstakes as gambling, it would likely only result in making those operations subject to the framework of the Treaty, which is relatively friendly, structured and commercially workable This would not drive operators out of Germany, as in the U.S., but would instead offer them licensing and oversight, i.e., legitimacy, within a more predictable regulatory environment. If history is any guide (see DFS 2.0), we expect this is ultimately where the U.S. will land with sweepstakes casinos when the upheaval inevitably subsides.

Sources:
https://www.lexology.com/library/detail.aspx?g=32eb712a-6346-4445-833b-ce5ecd14f5ee
https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2021/07/new-german-interstate-treaty-on-gambling-entered-into-effect.pdf
https://www.swlaw.com/publication/banned-fined-and-redefined-the-2025-state-crackdown-on-online-sweepstakes/
https://sbcamericas.com/2025/05/30/sweepstakes-player-acquisition-report/
https://iclg.com/practice-areas/gambling-laws-and-regulations/germany
https://intel.sccgmanagement.com/sccg-news/2025/10/8/germany-leads-europes-expanding-casino-market/?utm_source=chatgpt.com

Sweepstakes Casino Bills and Bans


https://esportsinsider.com/de/gluecksspiel/sweepstakes-casinos
https://sweepstakesplayde.com/#:~:text=Sweepstakes%20casinos%20in%20Germany%20provide%20a%20unique%20way,a%20model%20with%20%E2%80%9Csweeps%20coins%E2%80%9D%20%28or%20similar%20tokens%29.
https://www.forbes.com/sites/danielwallach/2025/02/24/legality-in-doubt-sweepstakes-casinos-could-be-targeted-by-state-attorneys-general/

Navigating Sweepstakes and Contests Regulations in Germany: A Practical Guide for Marketers

 

The Sports Betting Operator Team would like to thank Katherine Baker, Joshua Kirschner,Samantha Ahearn, along with all those at Nelson Mullins Riley & Scarborough LLP, that assisted with us with this feature. 

*** This exclusive article was originally published in Sports Betting Operator Magazine October 2025 Issue 019 Volume 007***