Across North America, gambling regulators are facing a new class of products that look, feel, and behave like gambling, but are engineered to avoid being regulated as gambling. The result is a widening enforcement and policy gap: consumers experience wagering-like risk and reward, yet regulators may lack clear jurisdiction, licensing hooks, data visibility, and responsible-gambling levers.
This “not-quite-gambling” trend is not a single product category. It’s a playbook, 1) Structure the offering so it resembles “promotional contests,” “social play,” or “financial event contracts,” then, 2) Scale quickly through digital distribution before statutes and policy catch up.
In the following analysis, we take a look at what “not-quite-gambling” means in practice, where it’s showing up in U.S. and Canadian markets right now, and how regulators are likely to respond—plus how modern gambling control platforms like POSSE GCS can help agencies move from reactive whack-a-mole to durable oversight.
These platforms commonly use two virtual currencies—one for “fun play,” another that can be redeemed for cash or prizes—while claiming they are lawful promotions rather than gambling. In many jurisdictions, operators lean on “no purchase necessary” mechanisms and contest/sweepstakes law framing to argue they are outside gambling statutes.
Regulators’ concern is straightforward: the consumer experience can mirror online casino play (slots/table games), but without the guardrails required of licensed operators (KYC/age verification, RG tools, integrity controls, complaints pathways, AML expectations, etc.).
U.S. example: In June 2025, the New York Attorney General, working with the New York State Gaming Commission, announced action to stop online sweepstakes casinos operating in New York, describing platforms using virtual coins exchangeable for cash and prizes.
Canada example: Major sweepstakes operators have also adjusted their Canadian posture amid growing scrutiny. For example, industry reporting in 2025 described Virtual Gaming Worlds scaling back/ending certain offerings in Canada in the context of heightened regulatory pressure in multiple jurisdictions.
Another rapidly emerging front is sports-related event contracts offered by entities positioning themselves as federally regulated financial markets rather than gambling. State gaming regulators argue these products function as sports wagering and should be licensed and restricted accordingly; operators often counter that states lack jurisdiction because the product is regulated under federal commodities law.
U.S. example: Reporting through 2025 highlights multiple states issuing cease-and-desist actions and litigation involving Kalshi and similar “prediction market” offerings in the context of sports outcomes. This matters to gambling regulators because it challenges the foundational post-PASPA model: states and provinces set the rules for gambling within their borders. Prediction markets introduce a credible “preemption” argument that, if expanded, could undermine state/provincial licensing regimes.
While this analysis focuses on “not-quite-gambling” impacting gambling regulators, it’s worth noting the adjacent pressure from randomized monetization mechanics (e.g. loot boxes/gacha), where consumer harms can resemble gambling harms. Research and evidence centers continue to track gamblification harms and the regulatory difficulty of enforcement in practice.
“Not-Quite-Gambling” tactics scale faster than regulation
Digital distribution, influencers/affiliates, and app-store style growth mechanics allow gray-market offerings to hit scale before regulators can align definitions, enforcement authority, and inter-agency coordination.
“Not-Quite-Gambling” tactics create “shadow gambling” without the accountability stack
Licensed gambling typically comes with required controls (licensing suitability, audits, game integrity, geolocation, player protection, AML, self-exclusion coordination, dispute resolution). “Not-quite-gambling” offerings can deliver similar risk/reward dynamics while evading the accountability stack—raising consumer protection and public confidence risks.
“Not-Quite-Gambling” tactics blur jurisdiction and fragments enforcement
Even when regulators believe an offering is gambling, enforcement can involve multiple actors: gaming commissions, attorneys general, consumer protection agencies, financial regulators, and sometimes federal agencies or courts. That fragmentation slows outcomes and creates inconsistent precedent.
Canada’s framework is distinct: provinces “conduct and manage” gambling, with Ontario operating a unique private-market iGaming model. At the same time, Canadians can still access a wide range of unregulated online offerings (including sweepstakes-style sites), creating a persistent “oversight gap” and pressure on regulators to act through advertising, payments, and platform accountability measures.
A concrete Canadian signal is Ontario’s public stance urging media platforms to stop promoting unregulated online gambling sites—an approach that targets the distribution and acquisition layer, not just the operator.
No single lever solves “not-quite-gambling.” Expect a layered response that combines law, enforcement, market messaging, and platform pressure:
Regulators and legislatures will increasingly define gambling by function, not labels—focusing on whether the player is risking value for the chance at a prize, how redemption works, and whether consideration is present in practice (even if “no purchase necessary” exists on paper). This reduces the ability of operators to arbitrage loopholes through product design.
The New York sweepstakes action is a template: use AG powers (unfair/deceptive practices, consumer fraud statutes) in tandem with gaming expertise to move quickly.
Rather than chasing every operator domain, regulators will pressure:
This is often faster than operator-by-operator litigation and can materially reduce reach.
Expect more investment in:
Some regulators may offer regulatory guidance or safe-harbor pathways so that borderline offerings can be brought into compliance (e.g., by requiring licensing or restricting redemption mechanics), rather than leaving the market in limbo.
The hardest part of mitigating “not-quite-gambling” isn’t spotting the problem—it’s operationalizing a repeatable response. Modern gambling control software can help regulators treat these issues as a managed workflow rather than a series of one-off fire drills.
As a unified platform for gaming regulators, POSSE GCS supports a streamlined, risk-based model for licensing and enforcement.
In conjunction with robust data-sharing, the practical ways in which systems like POSSE GCS can be configured to support “not-quite-gambling” regulation can include:
Centralized case intake and triage
Entity resolution and “single source of truth”
Risk scoring and prioritization
Inspection, enforcement, and action tracking
Reporting and transparency
In 2026 and beyond, “not-quite-gambling” won’t disappear; it will evolve. As some states/provinces crack down on sweepstakes casinos, you can expect migration into adjacent models: event contracts, skill wrappers, crypto rails, influencer-led micro-communities, and “prize-based” mechanics that are harder to pin down.
The regulators who will fare best are those who:
That’s the key shift: not just “is it gambling?”—but “can we supervise, evidence, and enforce at the speed the market moves?”
