At the beginning of 2025, Alabama unexpectedly found itself in the spotlight of the entire US gambling industry. In a state renowned for having one of the strictest policies regarding gambling, 13 lawsuits were filed simultaneously against sweepstakes casino operators. Why did a territory with such harsh restrictions on gambling entertainment become the arena for large-scale legal battles?
Why Alabama Ended Up at the Epicenter of Legal Battles
Alabama traditionally ranks among the strictest in terms of anti-gambling legislation. The state is definitely not among the top tourist destinations for gambling enthusiasts. There are no commercial casinos in the state, online gambling is prohibited, and there is no state lottery. It is rare to find such strict restrictions anywhere else in the US.
Of course, this does not prevent gambling enthusiasts from entertaining themselves in this way. This is because there is no problem for residents to access the website or app of one of the many popular online casinos. Many major brands operate in the country. Some of them are popular in many countries—from the US to India. An analysis of search queries shows the popularity of 1xBet, Megapari, and Parimatch. According to the data presented here, the online casino Melbet is rapidly approaching the ranks of the leaders. And this is just a small part of such examples. Therefore, the average resident of India or Alabama has no problem entertaining themselves in this way.
However, it was the unique provision Ala. Code § 8-1-150 that drastically changed the legal landscape. This law, effective only in Alabama, allows citizens to seek to recover their lost gambling money in court. In other states, filing such lawsuits is often impossible or is under the full control of state authorities. Currently, 13 cases have already been initiated under this article against sweepstakes casino operators, with only 8 plaintiffs behind them. Among the defendants are the largest companies providing sweepstakes games.
Such attention is due to the fact that there have been virtually no precedents of private class-action lawsuits against gambling platforms in the US. According to analysts, Alabama may become a pioneer in defending players’ rights through the courts.
How Lawsuits Against Sweepstakes Casinos Are Structured
Sweepstakes casinos are a special format of online entertainment in which players use two virtual currencies: one for free play, the other with the possibility of exchanging for real money. Essentially, such platforms offer the chance to compete for cash prizes in a gaming format, but officially avoid direct recognition as gambling.
The root of the dispute lies in the following. Plaintiffs assert that the platforms violate all three main characteristics of gambling:
- the presence of a prize
- the element of chance (determining the outcome)
- a “stake” or fee for participation
The operators counter that every user can play for free, and there is no direct purchase of a gaming chance. Thus, according to them, everything is fully compliant with the law.
The legal basis for the lawsuits is built on a combination of local and federal laws. The main focus is on how the platforms present the terms of participation: if there is even an indirect possibility of payment for the sake of winning, this becomes grounds for litigation.
What Barriers Plaintiffs Face
Against this backdrop, so-called arbitration clauses take on special significance. These are provisions in user agreements that require users to resolve all disputes with the platform outside of court—in private arbitration. In essence, this “wall” prevents the filing of class-action lawsuits, and each case is considered individually behind closed doors.
Even in those states where there is a legal opportunity to challenge the operation of sweepstakes casinos, such clauses have blocked cases from moving toward precedent. For example, according to law professor Ann Albright’s analysis, “all major class-action lawsuits have either been dismissed or settled without public decisions.” This creates an almost insurmountable obstacle for players.
In addition, plaintiffs have to prove that bets were placed specifically within Alabama. This territorial filter complicates the formation of mass lawsuits: each case requires separate proof of location, and the scale of legal coalitions is significantly reduced.
Sweepstakes Casinos Under Pressure
However, even with such mechanisms in place, pressure on the sweepstakes casino industry is mounting across the country. In 2025, three states at once—Montana, Connecticut, and Nevada—passed special laws prohibiting similar formats of online lotteries. The attorneys general of New York, Louisiana, and Mississippi issued orders for the immediate cessation of such operations.
Let’s compare this to the situation in Alabama: while in other regions the initiators are government agencies and regulators, only here are lawsuits filed by ordinary citizens. This is a unique model providing an independent path apart from the administrative machine.
According to attorney Jared Phillips, “if even one of the lawsuits in Alabama reaches a court decision, the consequences could affect the entire industry.” But so far, none of these cases has become a public precedent.
Will This Wave of Lawsuits Change the Rules for the Entire Industry?
Next, let’s consider what consequences the unusual activity of plaintiffs in Alabama may have. The absence of judicial precedents, as well as the presence of “impenetrable” arbitration clauses, in the opinion of most experts, significantly limits the prospects for mass change. Some lawyers believe that Alabama may become an experimental platform for new legal strategies against a cascade of legal traps. Others, like Professor Paul Larson, note that “the chance for a large-scale market overhaul remains extremely low” due to technical and legal obstacles.
Whether this case will become a turning point for the entire industry or remain a local flare-up will be shown in the coming months. Platform operators have already begun adjusting user agreements and strengthening internal controls over players’ geolocation to minimize risks in regions with strict regulation.
