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.
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.
🧱 Texas Penal Code — Chapter 47 (Gambling Law)
This is the section that makes traditional online casinos illegal in Texas. Every sweepstakes casino operating here has to work around this chapter.
The line that Texas uses to define illegal gambling
§ 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.
The law that could make playing a crime
§ 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.
Why some sweepstakes sites suddenly block Texans
§ 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.
Rules every sweepstakes site must show you
§§ 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.
→ 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.
You can’t be forced into sweepstakes marketing
§ 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.
💸 What you owe on sweepstakes winnings in Texas
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:
If you redeem Sweeps Coins for cash, gift cards, or anything with value, it counts as income.
What matters is when it becomes available to you — not when you cash out.
If you redeem $600 or more from any one casino, you might get a Form 1099-MISC or W-2G.
But even if you don’t get a form, you’re still legally required to report it.
👉 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.
🚨 News: SB 517 Has Passed
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:
🔍 What SB 517 Changes
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.
⏳ When does this take effect?
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.
🧭 What you should do now
Stick to platforms that clearly offer free entry (like mail-in or other sweepstakes bonuses).
Avoid any site that ties cash-out rewards directly to purchases.
Keep records of what you play, win, and redeem – especially if you plan to report taxes.
Check back before September to see which platforms are still open to Texas players.
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.
Will sweepstakes casinos remain legal after SB 517 goes into effect?
Probably not in their current forms. As of September 1, 2025, SB 517 expands the definitions of “gambling device,” and “thing of value.” This means that Sweeps Coins, gift cards, and digital credits may all be classified as gambling. Playing at some of these sites could also be considered a crime. Expect many platforms to limit or block Texas users before that September 1, 2025, deadline.
Can I get in trouble simply for playing sweepstakes casinos in Texas?
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.
Do I need to use the mail-in option if I want to stay legal?
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.
Do I need to report any sweepstakes winnings on my taxes if I’m in Texas?
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.
Why do some sweepstakes casinos block Texas players?
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.
Up at the break of dawn, with the roosters and the city’s diligent bakers, who see him as their best customer – Pavle, is an avid console gamer, pastry connoisseur, all-around family man, and a stickler for details. With a Master’s Degree in English Language and Literature, nothing gets past this guy when it comes to quality control. Pavle is one of our contributors for all content writing tasks. When he’s not working, Pavle can be found playing the keyboard in an instrumental post-rock band.
Sources
SCCG Management. (2023, April 4). Could Texas SB517 impact Texas sweepstakes casino regulation?Link
Texas State Law Library. (n.d.). General information – Raffles, contests, & sweepstakes. Link
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