Where Are Sweepstakes Casinos Banned? Geoblocking at Checkout
Learn how to track the states where sweepstakes casinos are banned and block coin purchases and prize redemptions with geolocation, KYC and AVS checks.
Photo: Pixabay
On this page 6 sections
- The State Crackdown on Sweepstakes Casinos
- States Where Sweepstakes Casinos Are Banned or Under Pressure
- Block Coin Purchases and Redemptions, Not Just One
- Layering Geolocation, KYC Address and Card Data for Geoblocking
- Winding Down Players When a New Ban Takes Effect
- Why Processors Drop Operators That Serve Banned States
Key takeaways
- A state restriction has to cover the whole promotion in that state: registration, coin sales, play, free entries and prize redemptions.
- The card BIN identifies the issuing bank, not the cardholder's state. AVS, verified ID address and device location do the real work.
- Check location at login, at purchase and at redemption, and block when any strong signal points to a restricted state.
- Before a restriction takes effect, size your redeemable balance exposure in that state and plan refunds and notices so the account closures don't turn into chargebacks.
There is no single federal list of the states where sweepstakes casinos are banned. Each state decides for itself, and the picture keeps changing as legislatures pass statutes, regulators act under existing gambling laws and new bills get filed. Wherever a state restricts the model, an operator's job is the same: block coin purchases, gameplay and prize redemptions there, and be able to prove the block relies on more than an IP address.
Because the list changes, read what follows as a framework, not a legal opinion. This is general information, not legal advice. Confirm the current status of each state with gaming counsel before you set or change your block list.
The State Crackdown on Sweepstakes Casinos
The model runs on two currencies. Players buy a play currency, often called Gold Coins, which has no cash value and is sold for entertainment. With each purchase they get a second currency, often called Sweeps Coins, as a free bonus. Sweeps Coins are also available through an alternative method of entry (AMOE), usually a mail-in request. Sweeps Coins won in casino-style games can be redeemed for cash prizes. Operators argue that because no purchase is necessary, the product is a promotional sweepstakes and not gambling.
States that move against the model reject that argument. In their reading, the coin purchase is the real consideration, the slots and table games are games of chance, and the cash redemption is the prize. Prize, chance and consideration together make up the classic test for gambling. Regulators who object also tend to point out that these operators are not licensed under the state's gaming laws.
Payment companies should watch one drafting choice in particular. A state ban can be written to reach anyone who knowingly supports an operator, and depending on the text, that could include platform providers, affiliates and payment processors. When a law is written that way, the ban stops being only the operator's problem and becomes a problem for everyone in the payment chain. Read the actual text of each law to see whether it does this.
States Where Sweepstakes Casinos Are Banned or Under Pressure
State action against sweepstakes casinos generally takes one of three forms. Your block list should account for all three, and each entry should record its source and effective date.
Statutory Bans
These are laws that prohibit online sweepstakes casinos by name or by description. The details that drive your compliance work differ from one law to the next:
- the effective date
- whether redemptions of balances earned before that date are allowed
- whether the law reaches vendors and payment providers
- what penalties apply and who can enforce them
Read each enrolled bill with counsel. Don't build controls from a news summary.
Regulator Positions Under Existing Law
A state doesn't need a new statute to restrict sweepstakes casinos. Its attorney general or gaming regulator can take the position that existing gambling laws already cover the model and act on that view, for example by sending a cease-and-desist letter. A letter like that isn't a statute, but sponsor banks and processors may treat any state that has taken formal action as restricted. Ask your acquirer how it treats these states before you decide to keep serving one.
Pending Bills Worth Watching
In any legislative session, bills targeting sweepstakes casinos can be filed, amended or stalled. A pending bill doesn't require you to block a state. It is a reason to prepare: find your players there, size your exposure, and draft the wind-down plan described below. If the bill is signed with a short effective date, you'll be executing a plan rather than writing one under deadline.
Block Coin Purchases and Redemptions, Not Just One
A common mistake is to stop coin sales in a restricted state while continuing to pay prize redemptions to players there, on the theory that no money is coming in from that state. A ban on operating or offering the games isn't limited to the sales side. Paying cash prizes to residents of a state that treats the activity as illegal gambling is arguably the clearest exposure of all.
The free entry route matters too. The legal defense of the model depends on free entry being available on the same terms as paid entry. So "void where prohibited" has to mean void for everyone in that state. If you cut off purchases but keep accepting mail-in requests from a restricted state, you haven't left the market. You're running the promotion there without collecting the revenue.
The safer structure is a state-level kill switch that turns off four things at once:
- New account registration
- Coin purchases
- Gameplay with the redeemable currency
- Prize redemptions and AMOE requests
Each of these sits at a different control point in your stack, so test each one on its own.
Layering Geolocation, KYC Address and Card Data for Geoblocking
No single signal is reliable enough to geoblock a sweepstakes casino by itself. Strong programs check location at login, at purchase and again at redemption, and they block when any strong signal points to a restricted state.
| Signal | What it tells you | Main weakness | Where to check it |
|---|---|---|---|
| IP geolocation | Approximate network location | VPNs, proxies, mobile carrier routing | Every session |
| Device location (GPS or Wi-Fi via app or browser permission) | Physical location at that moment | Spoofing apps, denied permissions | Login, purchase, redemption |
| Verified ID address (KYC) | Legal residence | Can be out of date; players travel | Registration and redemption |
| AVS billing ZIP | Address the card issuer has on file | Only as current as the issuer's records | Every card purchase |
| Bank account holder address | Where prize money lands | Requires account verification data | Every redemption |
Location-data vendors offer tools designed to detect spoofed devices. Our primer on using location data to stop scams and fraud explains how those signals work. Licensed sports betting operators face a similar problem on the deposit side, and our guide to how operators enforce credit card bans on betting deposits by state covers the payment controls involved.
Why the BIN Won't Tell You the State
The card BIN, the leading digits of the card number, identifies the issuing bank, the card brand and the card type. It reliably indicates the issuer's country, which helps with international blocking. It doesn't indicate the cardholder's state. A card from a national bank can belong to someone living anywhere, and a player who opened an account at a credit union in one state may live in another today.
The card data that does carry a state signal is the billing ZIP code checked through the Address Verification Service (AVS). If the billing ZIP on a purchase falls in a restricted state, decline the purchase no matter what the IP address says. Use BIN data for country checks and card-type rules, and use AVS for state checks.
A Worked Example: Four Players, One Policy
This example is illustrative and uses placeholder states. Assume counsel has told you to treat a player as restricted if either their physical location or their verified residence is in a restricted state. That is the conservative reading when a law's reach is unclear.
| Player | Device location | KYC address | AVS ZIP | Outcome |
|---|---|---|---|---|
| A | Permitted State | Permitted State | Permitted State | Allowed |
| B | Permitted State | Restricted State | Restricted State | Blocked (residence) |
| C | Restricted State | Permitted State | Permitted State | Blocked (location) |
| D | Permitted State (VPN detected) | Permitted State | Restricted State | Blocked, sent to review |
Player D shows why layering matters. The IP and the ID agree, but the card's billing address points to a restricted state and the device shows signs of a VPN. Decline the purchase and flag the account for manual review. Don't let the two signals that agree outvote the evidence.
Winding Down Players When a New Ban Takes Effect
How you exit a state decides whether the exit goes quietly or produces a wave of disputes. Players whose accounts close without warning are likely to dispute recent coin purchases, and those chargebacks hit your merchant account during the same weeks your processor is watching you most closely.
Start by measuring your exposure. As an illustration, assume 2,000 players in a newly restricted state hold redeemable balances averaging $35 each. That comes to $70,000 in potential prize liability you need a decision on. Counsel has to tell you whether the law lets you honor redemptions earned before the effective date, and for how long.
Then work through these steps in order:
- Turn off new registrations from the state as soon as the law is signed.
- Email affected players with the effective date, what happens to their balances, and how to redeem or request a refund, if counsel approves those options.
- Turn off purchases before the effective date so no one buys coins they can't use.
- Process eligible redemptions with full KYC, and pay only to verified accounts in the player's own name.
- Close the accounts on the effective date and keep the logs. You may need them for the regulator, your sponsor bank or a dispute.
Refunding recent purchases yourself can cost less than letting them turn into chargebacks. Each chargeback carries the transaction amount plus your processor's dispute fee, and each one counts toward the dispute ratio that card network monitoring programs track.
Why Processors Drop Operators That Serve Banned States
Card network rules generally require transactions to be legal in both the merchant's and the cardholder's jurisdiction, and the acquiring bank answers for every transaction it sponsors. If an operator keeps taking money from players in a state that has banned the activity, the bank is processing what that state considers illegal gambling. If the state's law reaches payment providers, the bank and its processor may also face direct exposure. The specific requirements sit in each network's rules and in your acquirer's own policies, so confirm them with your acquirer.
That's why underwriters ask for your restricted-state list, the name of your geolocation vendor, and evidence that the controls work. Our guide to what underwriters check on sweepstakes casino merchant accounts walks through that file. Accurate merchant category coding is part of the same review. Our explainer on gambling MCCs 7995, 7801 and 7802 shows why coding a gaming operator as something else is a fast route to termination and the MATCH list. It is never a workaround.
A bank review that turns up restricted-state transactions can end a processing relationship, even if your block list was correct on paper. To guard against that, keep the list current, test every control point each month, and keep logs you can produce on request.
If you run a sweepstakes or online gaming business and need a processing partner that understands this risk profile, MannyPay offers high-risk merchant accounts and 3-D Secure authentication for card-not-present sales. Before you apply, check your current state block list against the last 90 days of purchase and redemption logs, and fix any transactions that slipped through. Then request a free quote, and a MannyPay specialist will respond within one business day.
This article is for general educational purposes and is not legal, tax or financial advice. Card network rules and state laws change; confirm current requirements for your business.
