New Jersey has officially banned online sweepstakes and dual-currency gaming models after Governor Phil Murphy signed a new law targeting what regulators have
New Jersey has officially banned online sweepstakes and dual-currency gaming models after Governor Phil Murphy signed a new law targeting what regulators have described as “indirect gambling schemes.” The first major casualty of the new legislation is the sports prediction platform Novig, which has immediately ceased its operations in the Garden State.
The new law is a significant blow to companies that have used the sweepstakes model to offer real-money prize competitions in a way that navigates a legal grey area. Novig, which recently raised $18 million in a Series A funding round, had been operating in New Jersey with a dual-currency system that blended free-to-play virtual tokens (“Novig Coins”) with redeemable, real-money credits (“Novig Cash”). This model is now explicitly prohibited under the new rules.
New Jersey’s move isn’t an isolated incident. It’s the latest and most significant development in a growing, multi-state legislative push to clamp down on the sweepstakes model. Connecticut and Montana have already passed similar bans. While a comparable law in Louisiana was recently vetoed by the governor, other major markets, including California and New York, are currently reviewing proposals that would impose similar restrictions.
This coordinated trend represents a significant and escalating regulatory risk for any company in the US operating a dual-currency or sweepstakes-style gaming platform. The New Jersey law comes with steep penalties, with violations carrying fines of up to $25,000 per incident.
Novig’s decision to promptly exit New Jersey, one of the largest online gaming markets in the country, highlights a strategic choice to withdraw from jurisdictions with hostile legislation rather than engage in costly legal battles.
This approach stands in stark contrast to that of another alternative wagering platform, Kalshi. The federally regulated prediction market is actively fighting restrictions from multiple state regulators in federal court, arguing that its CFTC licence provides it with preemption over state-level gambling laws.
The industry is now watching these two divergent paths closely. The success of the state-level legislative push, combined with the outcome of Kalshi’s high-stakes legal challenges, will be critical in determining the long-term viability of alternative, non-traditional wagering models in the United States.
