Online sweepstakes casinos and sportsbooks in New York are confronted with immediate regulatory challenges after the signing of S.B. 5935 by Governor Kathy Hochul, which bans their operation and promotion while imposing penalties that can escalate to $100,000 for each breach.

This legislation, signed on Friday and effective immediately, specifically targets platforms that utilize “dual currency” models for casino-type gaming and sports forecasting. Additionally, it limits various support services connected to sweepstakes gambling, such as financial institutions, geolocation services, and media partners.

According to the new law, penalties for violations can range from $10,000 to $100,000 for each incident. Organizations found to be non-compliant may also be disqualified from obtaining or maintaining a gaming license within the state.

After the bill was signed, users of platforms like Novig and ProphetX based in New York indicated that their account access had been denied. Over the past year, the operators that provide sweepstakes products have faced heightened scrutiny across multiple jurisdictions.

Authorized online sports betting in New York continues to function, but only through licensed operators as mandated by state regulations.

New York authorities have previously cracked down on unauthorized forms of wagering. In June, Attorney General Letitia James reported that over two dozen sweepstakes platforms, including Chumba and Fliff, had been served with cease-and-desist notices.

The state legislature passed S.B. 5935 in June. The bill was delivered to Hochul on December 1, and officially went into effect on Friday.

Other states like California have enacted legislation to restrict sweepstakes operators as well. Regulatory bodies in those regions have issued cease-and-desist orders to similar entities.

“The protections and safety measures we diligently implement for mobile sports betting and iGaming are largely absent in most of these sweepstakes casino sites,” stated Democratic Senator Joseph Addabbo Jr., the bill’s sponsor, during an interview with Covers in March.