The Southwestern State doesn’t license online casinos, never has. But Texas sweepstakes casinos found a workaround. You can open a site, play games, and redeem real prizes – without breaking state law. This setup has been live for years. Texas hasn’t stopped it. I wanted to understand why – and what’s keeping it in place.
Pavle D.
Content Writer
Last updated
13 June 2025
Texas law breaks gambling down into three elements. If all three are present, the activity is illegal (written into Texas Penal Code § 47.01(4)):
Sweepstakes operators remove the “consideration” piece by offering a free way to enter. No mandatory payment, no gambling charge.
👉 See why sweepstakes casinos are legal in most states.
👉 See our full guide to sweepstakes availability by state.
We now know that sweepstakes online casinos only operate legally in Texas because they avoid triggering the state’s definition of gambling.
That definition – and the rules around promotions – are written into two parts of state law.
Here’s exactly what those laws say, and what they mean for you if you’re logging in from Texas.
This is the section that makes traditional online casinos illegal in Texas. Every sweepstakes casino operating here has to work around this chapter.
§ 47.01 – Defines illegal gambling as any activity involving a prize, chance, and payment.
This is the section that makes traditional online casinos illegal in Texas. Every sweepstakes casino operating here has to work around this chapter.
→ How it affects you: If a site ever removes its free-entry option (like mail-ins or daily SC rewards), it could cross into illegal territory. That puts the operator at risk, and your access may disappear without warning.
§ 47.02 – Makes it a misdemeanor to knowingly place a bet in an illegal gambling setup.
→ How it affects you: Right now, social casinos avoid this because they don’t require payment. But if Texas decides a specific site does count as gambling, your gameplay could technically become a criminal offense. It hasn’t happened yet – but the statute gives the state the power to act.
§ 47.06 – Prohibits the use of gambling devices, including digital simulations.
→ How it affects you: If lawmakers or courts decide that the games on a sweepstakes site slot machines too closely – and count as gambling devices – that platform could be blocked in Texas. This section is often cited when sites suddenly geo-restrict users here.
This doesn’t deal with gambling, but with how promotional sweepstakes (including sweepstakes casinos) have to operate.
§§ 622.051–622.059 – Set rules for disclosing odds, prize values, eligibility, and how to enter.
→ How it affects you: If a site doesn’t post clear rules about how SC can be earned or redeemed, it’s violating this code. That could lead to consumer complaints or regulatory pressure, which might cause the platform to block Texas players, even if you’ve already deposited.
§ 622.052 – Prohibits misleading sweepstakes ads or fake prize claims.
→ How it affects you: If a site promises “guaranteed prizes” or hides conditions behind paywalls, it’s breaking this sweepstakes casino law. If enough complaints land, access from Texas could be restricted. The safest platforms show odds, list real cashout conditions, and honor advertised bonuses.
§ 622.057 – Protects Texans who opt out of sweepstakes mail or emails.
→ How it affects you: You’re not required to accept marketing to keep your account. If a sweepstakes casino platform ties SC access or login bonuses to receiving emails – and doesn’t let you opt out – they’re violating this rule. You have the right to claim entries without becoming a target for advertising.
Texas doesn’t tax personal income, so if you redeem Sweeps Coins, the state doesn’t ask for a cut. But the IRS surely does.
Here’s how it works:
👉 Our advice: If you live in Texas and play regularly, track your redemptions as you go – don’t wait for tax season to happen. A basic spreadsheet or even screenshots are enough.
As of May 8, 2025, Senate Bill 517 has officially passed in Texas. This isn’t a proposal anymore – it’s law. And starting September 1, 2025, it will directly affect how sweepstakes-style games are treated in the state.
Here’s what matters:
SB 517 expands the state’s gambling laws in a few key ways:
Broader definition of “gambling device”
Anything that looks or works like a slot machine – including virtual versions – may now count as a gambling device. That includes many sweepstakes casino games.
“Thing of value” now includes more than cash
Gift cards, digital credits, or anything redeemable (including Sweeps Coins) could now be considered something of value under Texas sweepstakes law.
Playing might not be protected anymore
Until now, you were shielded under a rule that said gambling wasn’t illegal unless you ran the operation. That protection has been repealed. Playing on some platforms could now be a criminal offense.
Penalties are tougher
Running or promoting illegal gambling – including offering games that pay out prizes using simulated coins – is now a felony, not a misdemeanor.
September 1, 2025.
Until then, current and brand new sweepstakes online casinos still operate under today’s rules – but most sites will likely adjust, restrict access, or pull out of Texas entirely as that date approaches.
Compare Texas to its neighboring states.
Yes, for now. You can still use sweepstakes casinos in Texas as long as they offer a way to play without paying – like daily login rewards or mail-in entries. The key is that prizes must be winnable without spending money.
Most likely, yes. Starting September 1, 2025, SB 517 expands what counts as gambling. If a site offers games that resemble slots and payouts that can be redeemed – even if entry is free – they might now fall under the new gambling rules. That could make certain sites illegal to use in Texas.
After September 1, possibly. Right now, players aren’t criminally liable – only operators are. But SB 517 removes that legal protection. If you use a site that Texas now defines as illegal, you could be charged for playing, not just running the game.
No, but the option must exist. Texas law doesn’t require you to mail in entries – but sweepstakes casinos must offer a free way to get Sweeps Coins. That’s what keeps them legal. If you can’t find a no-purchase method, the site may not be compliant.
Yes – to the IRS, not to Texas. Texas doesn’t tax personal income, but any money you redeem from Sweeps Coins is still federally taxable. Even if you don’t get a tax form, you’re responsible for reporting it.
Only if you redeem $600+ from one sweepstakes casino site. Some platforms will send you a 1099-MISC or W-2G if you hit the reporting threshold. Others won’t – but that doesn’t change your obligation to report income.
