Southwestern State doesn’t license online casinos, and they never have. But Texas sweepstakes casinos found a way around it. You can open a site, play games, and redeem real prizes without breaking any state laws.
By Jerard V.
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GC 20,000 + SC 20
Big-name sweeps sites you can’t use in Texas


Texas law breaks gambling down into three elements.
Should all of those three elements be present, the activity is illegal (written into Texas Penal Code § 47.01(4)):
Sweepstakes operators have found a way around the “consideration” part by giving you and your fellow players a free way to enter. You might’ve heard folks mention a loophole in this situation, and that’s exactly what it is. These sites aren’t fully illegal, but they’re also not officially approved. And that is also why the term “grey area” comes up a lot.
👉 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.
You might’ve heard about SB 517, the bill that’s meant to really crack down on sweepstakes casinos in Texas. Here’s what actually happened.
SB 517 did pass the Texas Senate in May 2025, but it never made it through the House before the legislative session ended. And that’s why it didn’t become law.
As of January 2026, none of the changes tied to SB 517 are in effect.
Even though the bill didn’t pass, it’s still worth understanding why it got attention. SB 517 was supposed to tighten up Texas’ gambling laws, and it would have done the following, if it had passed.
Since the passage of SB 517 failed, sweepstakes casinos in Texas continue to operate under the same rules.
They remain legal by eliminating the “payment to play” requirement and providing free entry options. This keeps them outside of Texas’s legal definition of gambling.
There are:
Take a look at Texas compared to the states right next to it.
Absolutely. You can continue to use sweepstakes casinos in Texas as long as they also have a no-purchase entry option, such as daily login bonuses or mail-in entry. This structure avoids the “consideration” element in Texas Penal Code § 47.01, which is why gambling is illegal.
Not at this time. The law targets unlicensed operators, not individual players, as long as a no-purchase entry method is available. But once SB 517 goes into effect, the law will no longer protect players. If the platform qualifies as illegal gambling under Texas law, even casual players could face potential criminal liability under § 47.02.
No. Texas law simply requires there to be a no-purchase entry option. You do not even have to use the mail-in entries if the platform allows for daily bonuses, contests, or gaming loyalty reward points. So long as you can receive free Sweeps Coins, you are playing within the sweepstakes model.
Yes. Texas does not collect state income tax, but the IRS is still going to classify sweepstakes prizes as income and tax them. If you redeem Sweeps Coins for cash, gift cards, or merchandise, you must report it as income on your federal return. Even a small win counts.
Some operators may not want to take the risk of running sweepstakes that are questionable because they are not certain about the law. § 47.06 of the Penal Code states that gambling devices are prohibited, and that includes digital slot machines. If a sweepstakes casino could be construed as a gambling activity, they may keep Texans from gaining access to avoid putting themselves in a legal hot seat.