Tennessee’s New Law Seals the Exit for Sweepstakes Casino Operators

Tennessee is the latest state to slam the door on online sweepstakes casinos. Gov. Bill Lee signed Senate Bill 2136 into law on Friday, formally outlawing dual-currency gaming platforms that have marketed themselves as a legal way to play casino-style games for free.

The measure took effect immediately, and the Volunteer State now joins a rapidly increasing group that has decided the sweepstakes model is real-money gambling dressed up as a promotion. The new law ends a long-running campaign by lawmakers to clamp down on these platforms.

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What Tennessee’s Sweepstakes Law Actually Does

SB 2136 amends the Tennessee Consumer Protection Act of 1977 and adds sweepstakes operations to the state’s existing framework for unfair and deceptive trade practices. It treats these games as a consumer protection violation instead of creating a new criminal category. This approach gives the attorney general enforcement power and opens operators up to civil penalties and remedies already included in the 1977 act.

The bill crucially prohibits operators from exchanging any in-game sweepstakes currency for a prize, whether it’s cash or a cash equivalent like a gift card. Lawmakers deliberately made the definition broad to ensure that no loophole exists. It also explicitly covers platforms simulating gambling of any kind, including slot machines, video poker, table games, lottery-style games, bingo, and unlicensed sports betting.

The law also makes it unlawful for anyone to support, facilitate, or assist in running sweepstakes platforms, which puts payment processors, affiliates, and marketing partners within reach. The bill does carve out exceptions for activity Tennessee already permits.

A Long Time Coming

Attorney General Jonathan Skrmetti had pursued sweepstakes operators aggressively since late 2025. He sent cease-and-desist letters to about 40 companies last year. His office argued that the platforms were illegal even without new legislation, pointing to consumer protection statutes.

The pressure pushed major operators like Chumba Casino, LuckyLand Slots, McLuck, Global Poker, WOW Vegas, and Stake.us to exit or wind down their operations within weeks. Most of the significant players had left the state by the time SB 2136 moved through the legislature.

Skrmetti always made clear how he viewed the sector, saying that the only certainty with an online sweepstakes casino is that it would take a person’s money. This explains why lawmakers pressed ahead despite the operators exiting. Tennessee’s decision to codify the ban creates a legal foundation that operators will find much harder to challenge in court than a cease-and-desist letter.

The Legislative Journey Wasn’t Always Clear

The bill’s journey through the General Assembly wasn’t completely smooth sailing. The Senate passed SB 2136 unanimously in early March. The House advanced its companion, HB 1885, but adopted an amendment that removed virtual currency and sweepstakes language. This focused the bill more on the state’s broader gambling regulations and enforcement statutes.

Lawmakers withdrew a separate proposal to study possible regulation of sweepstakes casinos.

The Senate rejected the House-amended version, noting that the original was stronger. A conference committee ironed out the differences, and both chambers approved the compromise in late April. The conference committee’s report described sweepstakes casinos as platforms that serve as a façade, where users actually engage in real-money gambling. The proposal unsurprisingly showed no impact on state revenue because the platforms operate outside the licensed and taxed gaming system.

Sen. Ferrell Haile, who served as the bill’s chief sponsor, believes the bill gives the state a strong enforcement tool to keep out operations that exploit consumers.

A Companion Bill Passes With Tennessee Sweepstakes Ban

Gov. Lee signed SB 2136 alongside another gambling measure. SB 1992 makes prediction market manipulation a Class E felony, which can carry between one and six years in prison.

This bill comes after the Tennessee Sports Wagering Council had already issued cease-and-desist orders to platforms like Kalshi and Polymarket in January.

Tennessee is now one of several states to introduce bans on sweepstakes gambling in 2026. Indiana became the first to do so this year when it passed a measure in March, followed by Montana a few weeks later. The Oklahoma legislature overrode Gov. Kevin Stitt’s veto to introduce a ban, while Louisiana passed its own bill. All of these states follow a similar approach to Tennessee in closing the dual-currency loophole.

The practical outcome of the ban in Tennessee does not have much impact on people in the state, as the major operators had already left. However, the statute closes the door behind them and removes any ambiguity over whether the platforms might be able to return. The law gives the remaining operators no wind-down period, as it took effect as soon as Lee signed it.

Andrew O'Malley

Editor

Andrew O’Malley has been involved in the gambling industry for more than a decade. With a background in math and finance, he brings a unique perspective to gambling journalism. He covers everything from the latest prediction market litigation to sports betting scandals and iGaming legislation for publications like Gambling Insider and Gaming America. As a gambling journalist, Andrew closely follows breaking stories while also producing in-depth analysis pieces. He frequently speaks with experts in their respective fields to provide unique and informed perspectives.