A new bill introduced by Pennsylvania lawmaker Rep. Russ Diamond aims to ban sweepstakes casinos in the state, which has the largest online casino market in the country. This legislation, House Bill 2801, was submitted last month and has been referred to the House Gaming Oversight Committee. If passed, the bill would make it illegal to operate, conduct, or promote online sweepstakes games in Pennsylvania, imposing fines ranging from $50,000 to $500,000 for violations. Diamond is supported by four co-sponsors: Reps. Jacob Banta, Jeanne McNeill, Dan Moul, and Brad Roae.
This proposed ban comes amid ongoing debates concerning skill-gaming licenses, especially following a recent ruling by the Pennsylvania Supreme Court that declared video terminal skill games illegal, with the ban taking effect on October 14.
However, time is of the essence for this legislation. Although House Bill 2801 would take effect immediately upon enactment, there is no scheduled hearing date in the Gaming Oversight Committee. With only five remaining session days before the end of the 2025-26 legislative session on November 30, the bill faces a challenging path, especially given its sponsorship from the minority party. If this bill does not pass, similar proposals could reemerge in the next session, with discussions in other states like Wyoming and Virginia indicating potential future bans.
The bill outlines a new section in the Gaming Act, defining an online sweepstakes game as one that operates on a dual-currency payment system, allowing players to exchange currency for various prizes while simulating casino-style gambling. Conversely, any game that does not offer cash prizes would be exempt from this definition.
The legislation also prohibits any support or promotion of sweepstakes casino games, and though it does not identify specific vendors like those in California or New York, regulatory authority would be left to the Pennsylvania Gaming Control Board (PGCB) and the attorney general, who could initiate investigations and cease-and-desist actions against illegal operations.
Previously, the PGCB issued cease-and-desist letters to sweepstakes casino operators, but lacked enforcement power. The regulator has expressed the need for assistance in combating these operations.
In terms of economic impact, Pennsylvania stands out as one of seven states with legal online casinos, generating a staggering $3.46 billion in online gambling revenue in 2025. In August alone, iGaming revenue increased by 6.25% year-over-year, amounting to $245.7 million, and contributed $113.5 million in tax revenue to the state coffers.
The state imposes a hefty tax of 54% on online slots, which are closely related to the offerings of sweepstakes casinos. HB 2801 proposes a reduced uniform tax rate of 49.9% for licensed operators across various forms of online gambling, while also raising the sports wagering tax from 34% to 36%.
Currently, 13 states enforce laws banning sweepstakes casinos, including New Jersey and Connecticut, both of which have legalized iGaming markets.
As for the committee's political dynamics, Rep. Diamond, the Republican chairman, faces challenges from a Democratic majority in the House, which stands at 103 Democrats to 100 Republicans. Democratic Rep. Pat Harkins, the committee's majority chairman, previously suggested that any new skill game tax should match that of existing casinos at 55%, directly opposing Diamond's proposal.
The Pennsylvania State Police have stated that these sweepstakes machines are often located in common consumer venues such as restaurants, gas stations, and grocery stores, classifying them as slot machines under the Gaming Act. The existing regulations permit PGCB-licensed video lottery terminals at truck stops, and the proposal would extend licensing to liquor-licensed establishments, with a cap of five terminals per location.
With skill game enforcement already in effect, the Supreme Court ruling that identified these machines as slot devices under the law has created urgency among lawmakers. An estimated 70,000 machines statewide have been subject to this ruling, leading many businesses to remove them in recent days. Starting October 14, law enforcement can seize and pursue criminal charges against machines that are operating outside the legally sanctioned venues, making the stakes for this legislative action even higher.
