Authorized Developments within the Gaming Industry: Second Half of 2025 | WilmerHale

The second half of 2025 concerned important authorized and regulatory exercise throughout fantasy sports activities, occasion contracts, sweepstakes casinos and sports activities betting. The interval was marked by a gradual stream of latest rulings, enforcement actions and legislative initiatives that added additional layers to an already unsettled panorama. As businesses and courts utilized present legal guidelines to advanced, quick‑evolving enterprise fashions, operators and suppliers confronted a regulatory setting that remained fragmented and unsure.

Below, we define a number of of essentially the most important authorized developments and enforcement tendencies that formed the gaming trade between July 1 and December 31, 2025.

Fantasy Sports’ Newest Identity Crisis

Fantasy sports activities function inside a fancy patchwork of state legal guidelines—some states have adopted clear regulatory frameworks and others allow the exercise with out particular guidelines, whereas a handful proceed to ban fantasy sports activities altogether.

Traditional fantasy sports activities have lengthy been a fixture within the gaming panorama, centered on season‑lengthy contests during which contestants construct and handle groups over time. The emergence of each day fantasy sports activities (DFS) within the early 2000s introduced shorter, quicker‑paced competitions, which have since advanced into “pick’em” or DFS 2.0 codecs. In these newer variations, individuals wager in opposition to the home by making over/beneath alternatives throughout a number of statistical classes, with payouts decided by multiplying the entry price and growing with every right decide.

As these codecs proliferate and state approaches proceed to diverge, the authorized standing of fantasy sports activities—and particularly decide’em contests—stays unsettled. This evolving panorama set the stage for important developments within the second half of 2025. The principal growth within the latter half of 2025 was California Attorney General Rob Bonta’s official authorized opinion proclaiming that each each day fantasy sports activities and DFS 2.0 contests violate California regulation.

On July 3, 2025, California Attorney General Rob Bonta issued a proper opinion concluding that DFS—together with each conventional draft-style and decide’em codecs—violates California regulation. The opinion facilities on Penal Code Section 337a(a)(6), which prohibits betting on the end result of any contest of ability, velocity or endurance. The Attorney General reasoned that each decide’em and draft-style DFS contain individuals risking cash on the efficiency of third-party athletes in real-world sporting occasions and thus fall throughout the statutory definition of unlawful sports activities wagering—no matter whether or not ability or probability predominates,¹ saying, “We conclude that daily fantasy sports games constitute sports wagering and therefore violate section 337a.”

The opinion attracts a pointy distinction between collaborating in a contest and wagering on the efficiency of others, emphasizing that each DFS codecs quantity to bets on sporting occasions, that are expressly prohibited. The Attorney General additional discovered that these video games intently resemble conventional sports activities betting, together with proposition and parlay wagers, and rejected arguments that the predominance of ability ought to exempt DFS from the statute. Notably, the opinion clarifies that Section 337a applies even when ability is a major issue, because the regulation prohibits betting on unsure future occasions no matter how outcomes are decided.

While the opinion stops in need of addressing California’s lottery prohibition—citing the necessity for a fact-intensive evaluation—it has already prompted follow-up litigation and heightened regulatory scrutiny. In June 2025, Underdog Fantasy—represented by WilmerHale—filed go well with searching for to dam Attorney General Bonta from issuing a proper opinion on the legality of each day fantasy sports activities, arguing that the Attorney General lacked statutory authority to opine on the difficulty in any respect. The problem was filed earlier than the opinion was launched and framed the approaching steering itself as an illegal act that might coercively reshape the market regardless of carrying no impartial power of regulation. Although the courtroom denied emergency reduction and allowed the opinion to difficulty, the case underscored trade considerations that advisory opinions could operate as de facto regulation within the absence of legislative motion.

Event Contracts: Courts Continue to Grapple With Gaming and Event Contracts, and a New CFTC Chair Enters the Fray

Event‑based mostly contracts—monetary devices whose payouts activate actual‑world outcomes—stay on the heart of a quickly evolving battle over the place derivatives regulation ends and gaming regulation begins. Over the previous 12 months, platforms regulated by the Commodity Futures Trading Commission (CFTC or Commission) have expanded into sports activities‑contingent markets, prompting renewed scrutiny from state regulators and setting off a brand new wave of federal preemption litigation. At the identical time, main market individuals—together with platforms newly getting into this house—are taking more and more proactive steps to safe nationwide regulatory readability.

State Enforcement and Injunction Battles

State gaming regulators proceed to problem sports activities‑based mostly occasion contracts, issuing stop‑and‑desist letters and asserting that these devices represent unlicensed sports activities wagering. Currently, federal courts stay divided.

District courts in Nevada and New Jersey granted short-term restraining orders in opposition to state regulators, figuring out that CFTC jurisdiction preempts state enforcement over event-based contracts on CFTC-regulated platforms.² A district courtroom in Maryland reached the alternative conclusion, ruling that the Commodity Exchange Act and the amendments to the regulation beneath the 2010 Dodd-Frank Act that allow the CFTC to ban occasion contracts “contrary to the public interest” don’t preempt long-standing state gaming legal guidelines.³ Federal courts in Connecticut, New York and Ohio have but to difficulty rulings on comparable actions.⁴

Later within the 12 months, a Nevada federal choose reversed his two prior preliminary injunctions, discovering that the contracts provided had been “sports wagers” quite than CFTC-regulated monetary devices. In the opinions, the choose acknowledged that sports-based occasion contracts usually are not “swaps” throughout the CFTC’s unique jurisdiction as a result of they’re based mostly on the outcomes of sporting occasions and don’t contain occasions or contingencies “inherently joined or connected” with potential monetary penalties.⁵ These instances are at the moment pending attraction and will finally require decision by the US Supreme Court.

Most just lately, Massachusetts joined the controversy in a case that featured a distinct procedural posture. Rather than a prediction‑market operator suing in federal courtroom to enjoin state enforcement, the Massachusetts Attorney General introduced an enforcement motion in state courtroom, alleging that Kalshi was providing de facto sports activities wagering with out the required state license. In January 2026, the Superior Court granted the commonwealth’s movement for a preliminary injunction prohibiting Kalshi from providing sports activities‑associated occasion contracts in Massachusetts absent licensure beneath the state’s Sports Wagering Law and denied Kalshi’s movement to dismiss, rejecting Kalshi’s federal preemption arguments.⁶ In doing so, the courtroom emphasised the presumption in opposition to preemption in an space of conventional state police energy and concluded that state licensure necessities can function alongside the federal derivatives regime, whereas additionally pointing to Kalshi’s sportsbook‑like product design and advertising as reinforcing the commonwealth’s characterization of the choices as sports activities wagering.⁷

At the identical time, there are a number of putative class actions in opposition to CFTC-regulated platforms providing sports-based occasion contracts.⁸ The class actions allege that sports-based occasion contracts provided on CFTC-regulated platforms violate state and federal gaming legal guidelines, and so they search declaratory and injunctive reduction, together with cash damages and disgorgement. The class actions are nonetheless of their earliest phases.

Regulatory Outlook

On December 22, 2025, the US Senate confirmed Michael Selig, and he was sworn in as the brand new Chair of the CFTC, succeeding Acting Chair Caroline Pham. During the affirmation course of, Selig signaled a cautious, “light‑touch” method to occasion contracts and prediction markets, emphasizing deference to the courts on unsettled questions such because the permissibility of sports activities‑associated and different consequence‑based mostly derivatives and cautioning in opposition to close to‑time period regulatory intervention absent clearer statutory course. He urged that core ambiguities—notably the road between regulated occasion contracts and prohibited gaming—could be extra appropriately resolved by judicial interpretation or congressional motion.

By late January 2026, Selig had moved to extra actively form the regulatory trajectory for occasion contracts. In a public handle, he introduced that he had directed CFTC employees to withdraw the Commission’s 2024 proposed rule that might have prohibited political and sports activities‑associated occasion contracts, in addition to a 2025 employees advisory discouraging registrants from providing sports activities‑associated contracts on account of ongoing litigation, explaining that these measures had contributed to market uncertainty. At the identical time, Selig instructed employees to start drafting a brand new occasion contracts rulemaking supposed to exchange what he characterised as a framework that has “proven difficult to apply,” with the acknowledged objective of creating clearer, extra usable requirements for market individuals. He additionally directed employees to reassess the Commission’s participation in pending federal courtroom issues implicating the CFTC’s jurisdiction over occasion‑based mostly derivatives and to have interaction with the Securities and Exchange Commission on a joint interpretation of Title VII definitions to raised delineate the boundary between commodity and securities‑based mostly merchandise.

Sweepstakes: Is the Party Coming to an End?

Building on the heightened scrutiny seen earlier in 2025, the setting for sweepstakes casinos, their suppliers and buyers grew much more unsure within the second half of the 12 months. Rapid legislative modifications and more and more assertive regulatory enforcement made the authorized panorama particularly unstable, with new legal guidelines and actions rising throughout a number of states.

In current months, a rising variety of states have moved to limit or ban dual-currency “sweepstakes casinos.” Most notably, New York enacted Senate Bill S5935 on December 5, instantly prohibiting platforms that use dual-currency methods to imitate on line casino gaming or sports activities wagering.⁹ The regulation’s attain is broad, extending enforcement not solely to operators but additionally to know-how suppliers, fee processors, monetary establishments, media associates and geolocation distributors. Violations may end up in steep fines, lack of gaming licenses and future ineligibility. This legislative motion adopted a wave of cease-and-desist letters from the New York Attorney General, prompting many operators to exit the state earlier than enforcement started.¹⁰

On October 14, California Governor Gavin Newsom signed into regulation Assembly Bill 831, which went into impact on January 1, 2026.¹¹ Like the New York laws, California’s new regulation outlaws on-line sweepstakes casinos that use dual-currency methods and prohibits not solely operators but additionally their suppliers. Comparable legislative initiatives have been enacted in Connecticut, New Jersey Nevada and Montana (within the first half of 2025).¹²

A central difficulty in 2026 will be whether or not this development continues. Sweepstakes-related laws is pending in a number of states, and efforts to manage this house will doubtless be revived instates the place laws stalled or failed in 2025, particularly on the heels of the profitable legislative efforts in New York and California.

In addition to legislative efforts, enforcement businesses are implementing strong measures targeted on technical and client safety considerations. On December 29, Tennessee Attorney General Jonathan Skrmetti introduced that his workplace issued cease-and-desist letters to 38 sweepstakes casinos, stating that the “promotional sweepstakes model used by these casinos constitutes an illegal lottery prohibited by the Tennessee Constitution and violates Tennessee gambling and consumer-protection laws.”¹³ In Maryland, proposed laws to ban sweepstakes gaming stalled, however in line with its development from the first half of 2025, the Maryland Lottery and Gaming Control Agency issued quite a few cease-and-desist notices to unlicensed gaming operators within the second half of the 12 months, noting that the operators’ choices “contain the elements of gaming: consideration, chance and prize; in other words, it is gaming.”¹⁴ Regulatory authorities in Minnesota¹⁵ and Arizona¹⁶ have taken comparable actions in opposition to sweepstakes operators.

On the litigation entrance, we noticed the primary governmental authorized problem in opposition to a sweepstakes on line casino in August 2025 with the Los Angeles City Attorney’s civil enforcement go well with in opposition to Stake.us and greater than 20 affiliated entities.¹⁷ The criticism alleges that Stake.us operates as a mirror picture of Stakes.com, its real-money on-line on line casino counterpart, however makes use of a twin‑forex sweepstakes mannequin in an try to evade California’s anti-gambling legal guidelines. Under Stake.us’s dual-currency system, gamers can buy “Gold Coins,” which haven’t any financial worth however can be utilized for added gameplay, and in reference to that buy they obtain “Stake Cash,” which can be redeemed for reward playing cards or cryptocurrency. Players can then wager both forex sort in casino-style video games on Stake.us. The Los Angeles City Attorney alleges that the dual-currency mannequin is a “transparent attempt to mask real money gaming” capabilities as “quintessential gambling”¹⁸ regardless of being marketed as a “social casino.” Notably, along with Stake.us and its founders, the criticism names gaming suppliers and distributors as defendants to the go well with, alleging they aided and abetted the operating of an unlawful on-line playing enterprise. The go well with seeks injunctive reduction, restitution and civil penalties for violations of California’s Unfair Competition Law and False Advertising Law, in addition to the Unlawful Internet Gambling Enforcement Act (UIGEA). Although just like different lawsuits in opposition to sweepstakes gaming operators, this go well with might function a precedent‑setting take a look at of third‑get together legal responsibility in California.

The sweepstakes on line casino trade contracted sharply in 2025, as new laws, aggressive enforcement and high-profile litigation compelled many operators and suppliers out of key markets. We count on this difficulty will stay in focus within the first half of 2026. While this elevated focus could ultimately convey readability, for now the regulatory regime governing sweepstakes stays advanced and topic to heightened scrutiny. Staying knowledgeable of those fast-moving developments is important for anybody concerned in sweepstakes operations.

AML

Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance remained a prime precedence for gaming companies in 2025, pushed by heightened regulatory expectations and enforcement exercise at each the federal and state stages.

At the federal stage, most US casinos—together with business casinos, tribal casinos, gaming institutions and cardrooms—are categorized as “financial institutions” beneath the BSA.As a end result, they’re topic to complete BSA reporting, recordkeeping and AML/CFT (countering the financing of terrorism) program obligations just like these of banks, cash companies companies and different regulated entities. The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) administers and enforces these necessities, conducts examinations, points steering, and brings enforcement actions to make sure gaming operators preserve efficient, danger‑based mostly controls.

In addition to federal oversight, states could impose their very own AML‑associated necessities, a lot of that are extra restrictive or operationally demanding than federal requirements. State gaming rules generally require licensees to display good character, honesty and integrity and to keep away from actions or associations that might undermine the state’s gaming trade or regulatory framework.¹⁹ In 2025, state regulators—notably the Nevada Gaming Control Board (NGCB) and Nevada Gaming Commission (NGC)—actively leveraged this authority, scrutinizing a number of main operators and imposing important penalties for compliance failures and conduct deemed inconsistent with regulatory expectations.

FinCEN Modernization Push

Ina September 2025 assertion earlier than the House Committee on Financial Services, FinCEN Director Andrea Gacki signaled that there’s an “urgent need” to modernize the AML,CFT and BSA regimes.²⁰ Director Gacki emphasised the significance of a danger‑based mostly method that allows establishments—together with casinos and their banking companions—to focus sources on larger‑danger clients and actions quite than decrease‑danger ones. Proposed modifications embrace streamlining suspicious exercise report (SAR) and forex transaction report reporting and bettering reporting kinds to cut back compliance burdens and focus sources on essentially the most important threats. Casinos, which filed hundreds of SARs as a part of the 4.6 million stories FinCEN acquired in 2023, can be instantly impacted by these reforms—and banks servicing gaming shoppers might want to align their very own BSA/AML applications accordingly.

FinCEN Designates 10 Mexican Casinos as “Primary Money Laundering Concern”

In November 2025, FinCEN issued a Notice of Proposed Rulemaking (NPRM) designating 10 Mexican playing institutions as a “primary money laundering concern” after figuring out that their management facilitated cash laundering on behalf of the Sinaloa Cartel.²¹ Acting beneath Section 311 of the USA PATRIOT Act, FinCEN proposed a particular measure that might sever these casinos’ entry to the US monetary system by prohibiting US monetary establishments from processing transactions involving them. FinCEN underscored that this motion was essential to disrupt illicit income streams supporting cartel operations and to mitigate the nationwide‑safety dangers posed by cross‑border narcotics‑associated cash laundering. While the NPRM didn’t impose new SAR necessities, FinCEN suggested establishments to take into account the designation when evaluating associated exercise.

Nevada Enforcement Wave

Nevada regulators intensified their AML oversight in 2025, launching one of the vital important enforcement waves in current historical past. The NGCB and the NGC issued practically $27 million in penalties throughout a number of main Las Vegas–based mostly operators, citing recurring failures to establish and reply to excessive‑danger patrons and adequately confirm sources of funds.

The most up-to-date motion, authorized in November 2025, imposed a multimillion‑greenback wonderful on a significant Strip operator for lengthy–standing breakdowns in AML controls, together with permitting a identified excessive‑danger patron to gamble freely for years regardless of inner crimson flags and trade‑large bans. The NGC described these practices as negligent and emphasised the significance of sturdy escalations when buyer exercise is inconsistent with anticipated monetary profiles.

Earlier in 2025, one other main Las Vegas property agreed to an eight‑determine settlement resolving allegations that it permitted excessive‑danger people—some later convicted of unlawful bookmaking—to wager substantial sums with out enough due diligence. According to the NGC’s criticism, these points occurred throughout a number of years and mirrored systemic weaknesses in monitoring, host practices and verification of worldwide clients.

Regulators additionally introduced an motion in mid‑2025 in opposition to a outstanding luxurious resort, leading to a $5.5 million settlement tied to failures in its AML program and its dealing with of international patrons utilizing unregistered brokers to maneuver funds. The operator entered into a stipulation requiring enhanced inner controls, expanded coaching and strengthened audit oversight.

Collectively, these instances signaled a transparent regulatory precedence: Nevada expects gaming firms to preserve rigorous supply‑of‑funds and supply‑of‑wealth processes, promptly escalate crimson flags, and handle patterns of excessive‑danger play throughout properties. Enforcement actions all through 2025 mirrored growing intolerance for weak AML governance and a renewed deal with operator accountability.

Enforcement and Offshore Gambling Crackdown

State attorneys normal urged the Department of Justice to pursue aggressive enforcement in opposition to unlawful offshore playing operators beneath UIGEA, together with injunctive reduction, asset seizures and cooperation with fee processors to dam illegal transactions. Visa and Mastercard have pledged vigilance, signaling a coordinated effort to chop off unlawful operators from the US monetary system. For monetary establishments, this implies heightened scrutiny of fee flows tied to gaming and potential publicity beneath Regulation GG and comparable state legal guidelines. Banks ought to count on continued stress to monitor and block transactions linked to unlicensed gaming operators.

American Gaming Association Compliance Guide

The American Gaming Association launched its first main replace to its AML Best Practices for Anti-Money Laundering Compliance Guide since 2022, increasing steering on digital wallets, on-line gaming, cryptocurrency transactions and enhanced buyer due diligence.²² These updates mirror the trade’s shift towards risk-based monitoring and superior analytics.

Conclusion

The authorized and regulatory panorama because it pertains to gaming solely turned extra sophisticated through the again half of 2025.These developments spotlight the problem of evaluating and quantifying authorized danger when the governing guidelines are nonetheless taking form. Even acquainted points can tackle new complexity as states refine their interpretations or pursue completely different enforcement priorities, making lengthy‑time period planning tougher. In this setting, staying attuned to rising regulatory indicators and reassessing danger‑administration methods on an ongoing foundation stay important because the trade continues to evolve.

Footnotes