What EU Operators Can Steal from the Sweepstakes Model Without Touching a Gray Area

For iGaming operators, product leads, and platform teams navigating Europe’s tightening regulatory environment

A lot is happening in the United States iGaming market and many EU operators are missing out by not paying attention to this market, and taking notes. US sweepstakes casinos are built on the foundation of virtual currency, promotional mechanics, and no mandatory deposits and have developed one of the most rapidly growing player engagement models in all of digital entertainment.

The sweepstake casino market has now surpassed $8 billion and has been growing at 8-9% each year. By using a sweepstakes style onboarding process, platforms are seeing engagement spike 16% within the first 48 hours of starting to play and well above the traditional benchmark of 4-6% for traditional online casinos.

The overall discussion among boardrooms of EU operators is: "That is something for the US. We don't have to worry about that." That thought process is not accurate. The issue of legality is certainly applicable, so no disagreement there.

However, the commonality amongst the underlying mechanics of a sweepstakes model has nothing to do with the legality of the model and is completely transferable and applicable to regulated EU markets. What made the sweepstakes model so successful in the US was not its legal structure but the way it re-imagined player engagement, onboarding, and the psychology of the player. Most of these lessons are transferable to EU brands without violating any regulatory gray area at all.

This is how the playbook looks.

The Problem EU Operators Are Actually Trying to Solve 

The current pressure being placed on EU brands has to be stated at the outset in view of how it determines the importance of the lessons below.

EU operators are dealing with a dramatically increasing number of compliance-related demands, as well as an increasingly limited ability to advertise their products in many of the countries where they operate, such as Germany, France, and the Netherlands.

In Germany, the channeling rate for online slots dropped below 40% in 2024, well below the optimum threshold of 80%, due to high tax rates and low RTPs, thereby making it even more difficult for operators to attract and retain players. Traditional forms of player acquisition, such as bonuses linked to deposit amounts and tiered VIP programs, are no longer offering the returns they once did.

The regulatory environment for EU operators is not getting any better either; for example, in the Netherlands, new rules have been implemented that implement universal deposit limits and loss limits, stricter affordability checks, and a default ban on gambling advertising unless they have met stricter rules outlined by regulators. In Lithuania, there is a near blanket ban on advertising until 2028. Germany has transitioned online table games to a state-run monopoly. In the UK - historically the most open-market environment in Europe - Remote Gaming Duty increased from 21% to 40% as of April 2026.

In 2024, the regulated online gambling market in Europe was valued at €47.9 billion (39% of total gambling revenue in Europe) and continues to grow. However, regulated operators are subject to increasingly onerous obligations with respect to AML compliance, KYC verification, safe gambling, and regulatory reporting. As a result, smaller-regulated casino brands have lower margins and are under greater pressure to consolidate.

It is in this environment that regulated European operators will seek growth. There are more restrictions on how you acquire customers, more friction in how players deposit funds, and increasing scrutiny over what you promote. The sweepstakes model solved these issues not by just taking advantage of legal loopholes but rather by creating an entirely new form of player relationship that does not begin with a deposit.

This is a great concept to replicate.

What the Sweepstakes Model Actually Got Right 

Sweepstakes casinos may be viewed as a workaround in places where online gaming does not have proper licenses, but that does not consider what has made the model successful at scale.

One of the primary reasons why the sweepstakes model works is that it has substantially eliminated the largest single barrier to acquiring new customers for online casinos, which is the requirement to request money upfront before there is any reason for the would-be customer to have any trust in the casino.

In more traditional models of acquiring customers to play online casinos, the process involves registering for a site, verifying identities, depositing funds, then playing on that site. This results in many potential customers dropping off at every stage in that process. In regulated EU countries, for instance, the verification process kills off a large percentage of new customers due to stringent Know Your Customer (KYC) requirements. ADDITIONAL COMMENTARY: One of the issues that most people have with playing at online casinos is being asked to provide money to play without first experiencing the product; it's a daunting proposition.

Many sweepstakes platforms allow players to sign up using just their email and mobile phone number. There is no initial deposit required by the user, and the player is immediately provided with two forms of currency: one for entertainment, and another for the possibility of winning a prize. From the player's perspective, there is instant playability and zero risk.

As a result, players discover titles and build loyalty faster, so they spend on average 22% more time on the platform compared to traditional online casino users, reflecting deeper engagement with the freemium model. 

Five Sweepstakes Mechanics EU Operators Can Implement Legally Today 

It's time to roll up your sleeves and get down to business! The following mechanics are all based on what makes sweepstakes casinos work. These mechanics can be transferred over to EU operators' sites legally, with no need for anything related to virtual currency or a promotional prize structure, and there is no question of legality.

1. Onboarding is frictionless because it starts with play, not payment.

The most adaptable lesson to be derived from the sweepstakes model is that players are given the opportunity to play before they commit to paying. While KYC can’t be eliminated by operators in the highly regulated markets of the EU, they can look at where KYC fits into the player’s journey and make significant changes to that placement.

Many companies in the regulated EU marketplace already offer free-play mode, demo games and no-deposit trial balances; however, the majority of them currently are treated as an afterthought rather than as a primary way of onboarding players. Because of this, players are expected to be engaged with an operator before they are able to see a real-money option. Sweeps casinos have inverted this model to instead expect that all players will start with free-play engagements as their default experience, then later surface real-money play as the player has already developed a reason to engage.

For example, Germany is already signaling that it sees the logic and is actively reviewing frameworks that may allow wider use of non-cash entry games - offering a particular path to test and grow before committing to high-cost licenses or launching real-money platforms. 

2. Dual-Engagement Currency without the Legal Complexity

The dual-currency (i.e., entertainment-only or pure promotional) nature of the Sweepstakes Model is one of its most significant structural innovations — it separates traditional cash redemptions from those made using promotional money, and as such, EU-based operators cannot replicate the cash-redemption portion of the two-currency usage under the structure if they do not obtain a gambling license. However, the dual-currency psychology of creating two distinct ways of playing (entertainment versus cash/redemptions) based upon two different player motivations is completely replicable.

For instance, an operator can maintain the distinction between free-play tokens (entertainment-based, exploration-based, trial-based) and loyalty-based rewards (earned through real money usage and exchanged for bonuses, free spins, exclusive products). What is important from the Sweepstakes Model is not so much the currencies used, but the fact that both currencies operate on parallel value structures used by players at different engagement stages within the same game. By 2025, the majority of brands will have implemented tiered token systems to provide players with more access to games and reward earners as players complete game categories, thereby maintaining players’ engagement levels without crossing any legal boundaries.

This method is highly successful in fully regulated jurisdictions. There will be significant procedural variance between jurisdictions; however, the psychology will be consistent.

3. Gamification: A Fundamental Element of Engagement, Not an Additive Feature

Many gaming verticals have historically incorporated gamification into their respective platforms, but none have done so as extensively as the sweepstakes vertical. Sweepstakes employ game mechanics that promote reward for activity, reward for consistency, and reward for progression to achieve loyalty from players. Milestones, quests, and daily rewards for engaging in gameplay are part of how all competitive gaming in the sweepstakes vertical is now constructed and integrated into each other. By adding a competitive element through the use of progress mechanics, such as leaderboards, operators can create an environment that keeps players returning.

While most EU-regulated platforms have gamification-like features, very few have gamification architecture. When developing a gamification architecture, it requires that all meaningful player actions create a visible progression path for the player, which ultimately leads to the establishment of a habit for the player to return daily. There is a dramatic difference between the two terms. A bonus wheel is a feature. A quest system that facilitates game discovery, tracking the completion of session streaks, as well as offering loyalty milestones is an architecture.

The sweepstakes model is worth studying due to its reliance on making a non-cash experience engaging enough to retain players who have no requirement to become paid members of the gaming community. With increasing restrictions on cash-based bonus promotions in the EU, operators who are faced with such restrictions need to answer the question: When cash incentives are limited, what will continue to bring players back? The answer is the depth of engagement, not the volume of promotional offers.

4. A New Look at Responsible Gaming As An Advantage Of Your Product

This may seem odd, but it is actually very similar to other things: In the EU, most online gaming operators think about responsible gaming as compliance obligations. They are necessary for running an operation but not considered a strategic concern. With the advent of the "no deposit required" component of the sweepstakes model, a new opportunity has arisen for EU brands to create a product experience that combines protection with engagement and that provides complementary elements rather than competing with them.

If your player onboarding experience does not start with a financial request for funds, you can attract a broader spectrum of players, many of whom may have been otherwise discouraged from playing due to the "risk/reward" nature of the deposits associated with the gaming experience. If your player retention strategies provide progression and accomplishment rather than simply providing players with "free" bonuses when they lose, you develop far "stickier" and healthier player behaviour.

In the context of Europe, this is especially important because regulation in Europe surrounding responsible gaming will continue to focus more heavily on compliance in 2025 and will put additional emphasis on the ethical use of advertising and the use of new and advanced technologies to monitor players. As regulation continues to tighten, operators that create products where responsible gaming is a feature rather than an impediment will have a structural advantage over platforms that do not address responsible gaming.

5. First-party data collection as a pre-monetization strategy 

This could be one of the most overlooked opportunities available to you as an operator in the EU. Sweepstakes platforms excel at doing this.

Often, these platforms have a substantial number of free-play users and have access to a wealth of behavioral data regarding player preferences, session patterns, game affinities, and engagement triggers before any revenue is generated through real money transactions. The behavioral data collected from hundreds of thousands or millions of players provides the foundation for highly personalized conversions at the time of readiness for a player to make a purchase.

AI-based personalization tools that operate in conjunction with a sweepstakes platform will increase session frequency by 20-22% and improve payer conversion rates by 12-15% or more for even small publishers.

Any operator in the EU with a free-play or demo mode should treat those free-play sessions as first-party data collection opportunities rather than just provide customers with a demo of their product. Every game played in demo mode, and every time playing a game using a bonus, etc. produces behavioral data to create player profiles even prior to completion of the KYC process.

Where the Sweepstakes Model Actually Can’t Be Copied 

There is no doubt that intellectual honesty should be a priority. Competition will lead companies to better understand how similar the US sweepstake casino model (free or purchased virtual currency to wager on and win real prizes through a lottery) can be embraced in Europe, however, each factor must be reviewed through the lens of that country's gaming regulations before  implementation.

In North America, many have tried to create online sweepstake casinos (or other types of casinos) that adhere to the traditional lottery model, but in the EU, there are significant legal challenges that (at a minimum) require extensive review from each country's gaming regulators (especially if the country has strict gaming regulations).

The primary reason for this legal distinction is in the prize redemption component of a traditional lottery (or similarly to the prize redemption of a sweepstake coin for cash). Many EU countries will consider a prize redeemable in cash or cash-like-equivalent to be gambling by definition and will therefore require the appropriate gaming license. No leeway exists in the language and interpretation of the law in this situation.

Overall, there is NO single, uniform law in the EU that creates a legalized or restricted status for an online gambling operation. Member states continue to regulate their respective online gaming industry, however, there is an overall larger EU law framework that affects how countries establish their online gaming regulations. Therefore, operators must have a detailed understanding of the specific law(s) governing their online gambling activities in each member state.

For casino brands that want to explore where their specific market’s boundaries actually sit, working with a platform partner that understands both the engagement architecture and the compliance requirements across multiple jurisdictions is essential. That’s exactly the kind of infrastructure Groove has integrated into our aggregation platform and B2B solutions that are built to support helping operators build the right product without navigating the compliance landscape alone. 

What the Bigger Picture Looks Like

Currently, operators in the EU have the opportunity to shift their mindset and see regulatory pressure as more of a product design brief than a limitation. 

The sweepstakes model was not created by operators attempting to evade regulation. The model was created by product teams that established "what would a great casino experience look like without the element of money?" The eventual outcome of this investigation into the "great casino experience" led to the following four conclusions being drawn: 1) the desire to create an engagement-first architecture; 2) dual track values; 3) a frictionless entry into the casino; and 4) the benefits of behavioral personalization.

If you’re building or scaling a free-play or real-money casino product in Europe, talk to us and get the picture of real opportunities of what the right architecture looks like for your market.