How to Open a Sweepstakes Casino in the USA

If you want to start a legal iGaming business in the U.S., opening a sweepstakes casino is one of the most appealing options. Its recent market revenue reached $4.6 billion in 2025, starting from $3 billion in 2022. The sector’s growth comes directly from its simplified entry process, which provides players with legal casino-style games in over 35 states. 

Sweepstakes casinos operate under U.S. promotional law. Players enjoy games for entertainment, and receive prizes for each “bet”. 

This makes this model completely unique among ordinary gambling business activities. If you are starting from scratch, this guide will detail how the model works, and which legal and operational steps are required to launch. 

What is a Sweepstakes Casino

A sweepstakes is a game in which individuals have the opportunity to win prizes. Players have the option to play for free or purchase coins to play with or acquire additional features. 

There are two kinds of coins that are common on the site.

Firstly, there are Gold Coins / Game Coins (GC). They are designed for play and entertainment. Also,Gold Coins are sold to people and that is how the site earns money. Players are provided with a minimum of GC free, which they can purchase using real money as well. 

Another form of coins in sweepstakes casinos is called Sweep Coins (SC). In contrast to GC, SC has real money value and it is the means through which players can win cash and prizes. SC does not cost money and is never purchased. 

Players receive free SC in numerous ways, such as: a gift when a player buys GC; daily login bonuses; completion of assignments;  weekly promotions; free tournament play, and asking for free SCs via the Alternative Method of Entry (AMOE). 

An AMOE is a free way to enter sweepstakes, which avoids all governmental restrictions about illegal gambling. For example, posting a special hashtag on your next post gives you an opportunity to participate in next week giveaways. 

In sweepstakes casinos, a player should fill in a small form, and send it via mail. Casinos normally verifies the identity of the player and ensures that the rules are adhered to. 

Upon confirmation, the tokens are transferred to the player's payment method. This gives equal opportunity to everybody to win and meet the mandatory regulations of U.S. laws.

After players have access to their GC or SC, they can use them to play the casino-style games, such as slots, poker, blackjack, and sports betting. The major attraction of sweepstakes casinos is the fact that the player can redeem SC into actual cash prizes. 

In the free-to-play version, however, several players purchase Gold Coins to play more and to win the game sooner. Ads, subscriptions, and special offers are also able to bring income to the site. Ensuring an unmistakable separation between fun coins and prize coins makes the business lawful.

What Do You Need to Know About Sweepstakes Casinos

Online gaming cases fall under both state and federal jurisdiction. The sweepstakes is no exception. Federal principles establish minimum limitations, and states can add more regulations, or even prohibitions. 

A common mistake by sweepstakes operators is that it is enough to provide a free entry when a person makes a purchase. That is not true. A noticeable sign “No Purchase Necessary’’ should always be present on your website. This free offer is also a part of an AMOE (Alternative Method of Entry).

Make it clear how to access this no-purchase option, and what the chances of winning through this way. Regulators will not be pleased if people do not know how to play and how a winner is selected.

Lastly, describe how specifically those who do not pay anything can become winners. The ideal solution is to add a visible button or even a note with these words: "Enter here for free’’. Clear rules of playing build trust and make your business legal in the U.S. 

Also, you can add the maximum prize values as well as registration or bonding requirements.

Sweepstakes legislation varies widely per state. Some states permit any type of sweepstakes, while others have stricter regulations or even prohibitions. 

That is why you need to verify and observe the regulations in each state where you are going to accept players. It is also a way to protect against fines or blocking. The easiest way to do that is to ask experts. At MGL, we can get all your questions answered within a 20-minute call. 

Who Can Open a Sweepstakes Casino

An online casino with a sweepstakes can be a good business opportunity for both inexperienced and experienced entrepreneurs.

Startups and Entrepreneurs

A sweepstakes casino is worth considering should you wish to venture into a business with good revenues and minimized entry barriers. 

In comparison with traditional online casinos, this model does not demand expensive gambling licenses or extremely substantial start-up budgets. You can easily join the market and start earning money in a short time with proper planning.

Existing Online Projects

Adding a sweepstakes model helps existing online casinos increase revenue and player activity. This strategy attracts users who are not into traditional online gambling and play casino-style games only for fun. It is an easy way to reach a bigger audience and diversify your product with minimum legal hurdles.

What Are the Requirements to Open a Sweepstakes Casino 

Good news: you do not need a separate gambling license to run a sweepstakes casino. Instead, you need a legal opinion from the U.S. counsel to ensure that your platform and free entry (AMOE) comply with federal and state laws. 

You will need to implement Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols based on your prize redemption risks. In addition, ensure you have clear Terms and Conditions for prize claims, along with privacy and data storage policies. 

Age verification rules and fraud prevention rules are also necessary to avoid legal scrutiny and keep your players safe. Also, prepare some personal documents such as: 

• Valid passports of all key persons
• Recent bank statements
• Utility bills (issued within the last 3-6 months)
• Curriculum Vitae (CV)
• Official authority criminal record certificates

And it is mandatory to show regulators particular corporate documents, including:

• Proof of available funds
• Articles and Memorandum of Association
• Detailed business plan
• Complete explanation of the sweepstakes software
• Clusters, server hosting, and security of data
• Percentage of ownership of all shareholders

Depending on the state selected the specific list of documents might be different, but you must comply with specific requirements for each authority.

How to Start a Sweepstakes Casino

Step 1: Register a U.S. Company

In the United States, you must establish a legal entity as either a Limited Liability Company (LLC) or a corporation and obtain an Employer Identification Number (EIN) to be able to open bank accounts and satisfy tax reporting requirements. A company can be incorporated when you intend to attract investors or collaborate with major partners.

Delaware and Wyoming are the most popular states due to their favorable business regulations. Nevada and New Mexico are also common choices, with Nevada giving good privacy for owners.

It is possible to increase the trust with banks and payment providers by having a U.S. resident with at least 10% of the company. This individual serves as an official representative for contact quite frequently. 

If you lack a local partner, MGL Solutions may help you to find the solution for this problem. We work with reliable partners, who enable you to achieve compliance requirements without granting actual control to a third party.

Step 2: Set Up a Physical Office

Banking and payment approvals need:

• Physical office space
• The company name on utility bills
• A landline linked to the business in the U.S
• Office door signage of the company

During the verification process, certain banks can demand photographs of the office and any signage.

Step 3: Manage Compliance Policies

Banks and processors will ask you for formal compliance documentation, which includes:

• AML policy
• OFAC sanctions policy
• Responsible Gaming policy
• Data Protection policy
• Certification of Control

Collecting these documents is essential. Many operators fail due to incomplete paperwork or compliance errors, leading the authorities to return applications that do not meet their requirements or even reject applications.

MGL has a 100% success rate in securing approvals, backed by over five years of experience in iGaming. 

By working with our lawyers, you can avoid license returns. We audit each document and assist on each step in order to escape any mistakes and enhance approval success. 

Step 4: Obtain a Legal Opinion

According to a legal opinion, your sweepstakes model complies with the relevant laws. This is a document that in most cases is required to open an account and become bank-approved. Most banks will not cooperate without it. 

Step 5: Open a U.S. Bank Account

Banks are quite selective, as sweepstakes are shown as high-risk businesses for them. To apply, you must provide all company and compliance materials, including a legal opinion. Selecting a bank that has dealt in sweepstakes and high-risk sectors is a big step towards increasing the chances of approval. 

MGL assists you with choosing the right banking and provides you with a consultation on all essential documents to avoid any payment troubles.

Step 6: Establish Payment Processing

Once your bank account has become active, you can request payment processing services. Providers usually require:

A U.S. based company that has an active bank account.

• Compliance documents
• Business plan
• Transaction history.

Prior experience in licensed gambling is an advantage. A realistic and presentable business plan also enhances the likelihood of establishing a stable and long-term payment processing partnership.

Verification and Fraud Controls of Customers 

A sweepstakes is a technologically challenging platform. 

Firstly, your system has to deal with two types of flows and the experience must be simple to comprehend. One of the flows is “fun” coins, which players use to play games and enjoy features. 

The other flow is that of “prize” coins, which the players can win and redeem to get real prizes. It is better to keep these flows separate and clear to ensure the players are informed about what they are spending and what they can win. 

The platform must also use location tracking so that play is only allowed in states where it is legal. Using VPN detection will stop people from faking their location. 

Even though the games offer free entry, any purchase of SC still must go through secure payment processing. These purchase records should be kept completely separate from prize payouts.

Detailed records and audits are essential because regulators and banks require full transparency. To pay out prizes, you should set a clear schedule, prepare for tax reporting, and use extra security measures for large amounts, such as asking for state ID or other verifications.

Since the iGaming industry is a target for fraud and money laundering, scammers use fake identities and unverified documents to create accounts. To protect your business, it is important to explore the meaning of identity verification and perform multi-factor authentication (MFA). Plus, winners must pass an age and ID checks to get the prize on your platform. 

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How Much Does It Cost to Open a Sweepstakes and How Long Does It Take  

This is an intensive task that needs a lot of setup to get a compliant sweepstakes operation running. 

Company formation, drafting of AML/KYC policies, platform development or integration, and initial banking typically fall into a medium range of about $30,000 to $50,000 for a basic, audit-ready setup; a more advanced build costs more. 

As an illustration, LLC formation in the United States, corporate controls drafting, and preparing necessary compliance policies may cost between $6,000 and $10,000, and special banking/legal documentation can cost between $20,000 and $40,000.

The initial deposit for most banks is also between $10,000 and $100,000. The larger the deposit, the greater the trust from banks and providers. 

Developing a service of a sweepstakes site, full production (end-to-end testing, user interface polishing, banking/payment integration, etc.) might require 3-4 months or more. Approvals for legal operations in one of the US states, on the other hand, could require 6 months or longer.

In comparison, offshore jurisdictions such as Anjouan or Curaçao will regularly license within 1-3 months on receipt of documentation. But you cannot operate within the US holding these licenses. 

What Are the Riskiest States for Opening a Sweepstakes Casino

Pay attention to those states where sweepstakes are banned or have strict rules. Montana became the first state to fully prohibit online sweepstakes gambling under the bill that took effect on October 1, 2025.

California followed suit the following year, passing legislation that makes it a crime to conduct online sweepstakes games using a dual-currency model.

A ban on most dual-currency sweepstakes has been enacted by New Jersey as well. In New York, bills were enacted in the legislature to ban virtual-coin sweepstakes games.

Meanwhile, regulators in Connecticut, Maryland, Michigan and Delaware have issued cease-and-desist orders against illegal sweepstakes websites.

In states that ban sweepstakes, you could face fines or even be closed down. For instance, Washington fined one operator $29 million for conducting unlawful sweepstakes. Similarly, regulators in Michigan and Maryland have begun targeting platforms with formal warnings.

Sweepstakes in other states are permitted but there are promotion regulations. For example, Florida mandates registration and bonding of any sweepstakes having prize pools exceeding $5,000. Rhode Island requires registration of prize pools of more than $500.

In reality, to reduce these headaches, most sweepstakes casinos offer a no-purchase entry option (AMOE) and have low prize pools per contest.

What Can Speed Up the Launch of a Sweepstakes 

The fastest way to run your own sweepstakes casino is to do so outside of the United States. The business can be fully legal and international, operating under an offshore license.

It is quick, cost-effective, and offers access to gaming-friendly banking and payments. Many offshore jurisdictions issue their licenses within 1-2 months. For example, Anjouan (Comoros Islands)is referred to as one of the fastest and cost-efficient jurisdictions where full applications anywhere in the world are approved within 4-8 weeks.

A Nevis offshore license can be obtained within 2-3 months,which  includes island company setup and document preparation. We broke down in detail how to open a sweepstakes casino outside of the USA in another article. Make the most of the information provided there.

By using an offshore gaming license, you are free to operate in cross-border locations, use gaming-friendly banks, and combine international forms of payment. Furthermore, you will benefit from 0% corporate and GGR taxes. 

At MGL, we help U.S.-based founders obtain offshore licenses in as little as one month. With our ongoing support, all you have to do is prepare personal documents. The rest, including a 3-year business plan, AML, KYC and RG policies, organisational charts, as well as corporate documentation, is on us. 

We handle your company incorporation in as little as one day. This allows you to go global and scale your sweepstakes business faster than your competitors, who have to manage all the paperwork and the application process alone.