States Are Cracking Down on the Entire Gambling Frontier

Sweepstakes Bans Lead the Charge

Nowhere is the crackdown moving faster than in the sweepstakes casino platforms. What began as an isolated enforcement action in Montana when Governor Greg Gianforte signed SB 555 in May 2025 turned into a legislative avalanche. 

Connecticut, New Jersey, California, and New York all enacted explicit bans before year's end, with California's AB 831 passing the Assembly 63-0 and the Senate 36-0 before Governor Gavin Newsom signed it in October. 

New York Attorney General Letitia James forced 26 platforms out of the state with cease-and-desist letters before the legislature even voted. By January 2026, nearly a quarter of US states had formal or de facto bans.

Tribal gaming operators have spurred politicians into action after appealing directly to legislators and making the case that unregulated sweepstakes platforms were siphoning billions in revenue without paying licensing fees or taxes.

Sportsbooks Feel the Squeeze

Sportsbooks are heading into an era of revenue extraction. Illinois added a per-bet fee on top of its already-tiered 20-to-40 percent tax rate, while Maryland raised its sports betting tax to 20% following Governor Wes Moore's budget request. 

Multiple states like Maryland, Massachusetts, and New York are advancing consumer protection bills in 2026 that would require bettors to pre-set deposit limits, cap advertising, and restrict prop bets. 
An increased negative view of sports betting among Americans has caused these shifts. A December Washington Post poll found that 36% of Americans now describe sports betting as a "bad thing," up from 23% in 2022. 

Prediction Markets - The Federal Fight

Kalshi and Polymarket, operating under CFTC licenses as federally regulated commodity exchanges, argue that their sports-event contracts are financial instruments exempt from state gambling laws. However, states see things differently. 

Arizona charged Kalshi with 20 misdemeanor counts of illegal wagering. Connecticut, Illinois, and Nevada sent cease-and-desist orders. On April 2, the Trump administration responded by suing Arizona, Connecticut, and Illinois in federal court, arguing that CFTC jurisdiction preempts state law. 

The Third Circuit sided with Kalshi on April 6 in a 2-1 ruling, holding that New Jersey's gambling laws were field-preempted. But the Ninth Circuit ruled the opposite way on Nevada, creating a live circuit split that legal analysts say is headed to the Supreme Court.