Tennessee and Oklahoma Legislatures Move to Curb Online Sweepstakes Operations

Tennessee and Oklahoma are spearheading legislative initiatives to tighten controls on online sweepstakes businesses, with significant bills recently progressing through their state Senates. These proposed laws aim to reclassify and restrict the operations of platforms that, while asserting historical legality, are increasingly viewed by state authorities as circumventing traditional gambling regulations.

Advocates for the sweepstakes model frequently contend that their operations are rooted in established legal precedents, distinguishing them from conventional online casinos. However, officials in both Tennessee and Oklahoma argue that these platforms, particularly those employing virtual currencies convertible into cash prizes, essentially function as unregulated online gambling enterprises, operating outside the rigorous regulatory frameworks governing licensed gaming.

In Tennessee, Senate Bill 2136 has successfully passed the Senate and is now under consideration by the House of Representatives. Sponsored by Senator Ferrell Haile, this legislation seeks to prohibit the use of virtual currencies that enable participants in online sweepstakes to redeem their in-game progress for cash or cash equivalents. The bill's text explicitly states its intent to criminalize the "operation, conducting, or commercial promoting of online sweepstakes games and other forms of online or app-based gambling," characterizing these activities as detrimental to public health, safety, and welfare. Should SB 2136 become law, it would designate the introduction of online sweepstakes gaming products as violations under the Tennessee Consumer Protection Act. This would empower Attorney General Jonathan Skrmetti to intervene and impose penalties. General Skrmetti has already demonstrated a proactive stance against the sector, having issued cease-and-desist orders to 40 sweepstakes operators in December 2025.

Parallel efforts are underway in Oklahoma, where Senate Bill 1589 has also cleared the Senate and is proceeding to the House. This bill, co-sponsored by Senator Todd Gollihare and Representative Scott Fetgatter, employs comprehensive language to define online gambling. It encompasses any internet-accessible games featuring a risk-reward dynamic or those resembling traditional gambling, including the prevalent dual-currency systems utilized by current sweepstakes providers. Significantly, SB 1589 proposes classifying the provision of online sweepstakes games as Class C2 felonies. The legislation also extends accountability to technology providers and other service entities associated with these businesses, deeming them complicit in the activity.

These legislative actions in Tennessee and Oklahoma underscore a growing trend among state governments to scrutinize and regulate the burgeoning online sweepstakes industry. Both bills represent a decisive move to align these operations with existing gambling laws, potentially setting a precedent for other states grappling with similar issues. The outcomes in the House of Representatives for both SB 2136 and SB 1589 will significantly shape the future landscape for online sweepstakes within these states.