US Sweepstakes Casinos Collapse: The Money Factory and CoinFrenzy Shut Down

The landscape of gray-market gambling in the United States is undergoing a seismic shift as two major sweepstakes casino operators, The Money Factory and CoinFrenzy, have ceased operations. This move comes as lawmakers across various states intensify their scrutiny of the industry, leading to a wave of closures over the past year. While The Money Factory permanently ended its operations this past Sunday, CoinFrenzy is providing its users with a short window to redeem their balances.

The crackdown is driven by a series of new legislative measures in states including New Jersey, New York, Indiana, Maine, Oklahoma, Louisiana, and Tennessee. These jurisdictions have either explicitly banned or effectively prohibited sweepstakes-style platforms that previously operated in a legal gray area by framing gambling as promotional contests. The sudden exit of these brands underscores the increasing risks for operators functioning without state-issued licenses.

Numbers and facts

The impact on customers varies significantly between the two closing platforms. The Money Factory stated on its official website that it has "permanently ceased operations." While the company claimed that player accounts and redemption requests would be "recorded and preserved," it stopped short of promising automatic refunds. In contrast, Lucky Labz LLC, the parent company of CoinFrenzy, is no longer accepting new purchases but is allowing players to redeem their balances until September 25.

The history of these operators suggests a pattern of rebranding and pivoting. For instance, Kickr Games Play Ltd closed its Kickr sweepstakes site in March following a cease-and-desist order from the Louisiana Gaming Control Board, only to launch a new product called GetGud shortly thereafter. Furthermore, the founders of The Money Factory—Trevor Pope, Clay Johnson, and Jared Pope—previously developed GammaSweet, a technology stack designed to facilitate the rapid launch of sweepstakes gaming sites.

Background

The tension regarding gaming regulation extends beyond sweepstakes platforms into the realm of prediction markets and micro-betting. Paul Liberman, President of Operations at DraftKings, highlighted the future of these markets at the Milken Institute Global Conference. DraftKings acquired Simplebet in 2024 for nearly $200 million, a move reflecting the massive investment in in-play betting technologies. DraftKings now offers prediction contracts in 48 states, including 18 where its traditional sportsbook is not yet permitted.

"In sports, we’re gonna see faster, more dynamic micro markets appear that don’t exist yet." - Paul Liberman, President of Operations, DraftKings

Meanwhile, in California, a long-standing battle between tribal gaming operators and local card rooms has reached a new boiling point. New regulations for blackjack-style games in card rooms went into effect this month, which the state's Department of Justice estimates could slash card room revenues by $68 million. James Siva, chairman of the California Nations Indian Gaming Association, viewed the new rules as a victory for tribal sovereignty and the enforcement of established exclusivity rights granted in 2000.

Why it matters for German players

For players in Germany, the turmoil in the US sweepstakes market serves as a stark reminder of the benefits of a regulated environment. Since the implementation of the State Treaty on Gambling 2021 (GlüStV 2021), Germany has established a clear legal framework. Players are strongly advised to only use platforms listed on the official GGL whitelist. Unlike the unregulated US sweepstakes sites, GGL-licensed casinos offer guaranteed legal protections and mandatory player safety features.

Key protections in Germany include a monthly deposit limit of 1,000 euros, tracked via the LUGAS system, and a maximum stake of one euro per spin on virtual slot machines. While US players at The Money Factory are currently left in uncertainty regarding their funds, the German licensing system ensures transparency and legal recourse. Playing at MGA or Curacao-licensed sites presents similar risks to those faced by customers of now-defunct US sweepstakes platforms.

What it means for GGL-licensed casinos

For casinos operating under a GGL license, the situation in the US demonstrates that regulatory compliance is the only path to long-term sustainability. The proactive stance of the GGL in shutting down illegal operators mirrors the recent actions of US state boards, ensuring that the legal market remains competitive and trustworthy. By adhering to strict standards, German operators build lasting credibility with their audience, contrasting sharply with the fly-by-night nature of unregulated international competitors.