A single real estate startup saved consumers more than $13 million while operating under Utah's regulatory sandbox, demonstrating how temporary waivers from regulations can benefit both entrepreneurs and the public. The finding comes from a new report published June 24, 2026, by Pioneer Institute, which examines how regulatory sandboxes—programs that let businesses test innovative products without complying with certain regulations—are working across the United States. About 14 states have now passed some form of sandbox legislation, though only a few have actually enrolled participants, with Utah operating the most active program.
Utah currently has the most active sandbox in the country, having admitted dozens of businesses, most of them in legal services. Arizona and Hawaii have also each enrolled several businesses through fintech and other technology-specific programs. The report notes that the impact extends beyond formally admitted companies, as administrators also advise businesses that ultimately don't enter the program, helping them operate within regulatory requirements. Utah's legal services sandbox, created by the Utah Supreme Court in 2020, had received more than 100 applications and authorized over 50 providers by early 2024. The program recorded roughly one complaint for every 2,123 services, on par or better than traditional lawyers. In Utah, more than 90 percent of filed cases involved at least one unrepresented party, highlighting the access-to-justice gap these programs aim to address.
The report finds that regulations written decades ago can hamper business creation in ways lawmakers never anticipated. According to the report, entrepreneur Alex Carter invested about a quarter-million dollars to build an innovative cost-sharing service for auto repairs, but state regulators in Utah shut it down—not because it caused harm, but because it resembled insurance closely enough that regulators deemed it illegal. The Pioneer Institute report states that regulations often benefit large, established companies more than consumers, since "every costly requirement a new business must meet also works as a barrier to competition." An independent evaluation by IAALS found little evidence of the harm critics predicted from Utah's legal sandbox, even as the program expanded legal assistance to thousands of people.
The model originated in 2015 when the United Kingdom's Financial Conduct Authority launched the first sandbox so fintech startups could test products without triggering every rule meant for established banks. Arizona became the first U.S. state to adopt a sandbox in 2018, also for fintech, and the concept has since spread nationally. The report explains that sandboxes address the problem of regulatory stagnation—most regulatory rules answered a real concern at some point, yet once enacted they stay the same while technology evolves. The report cites ridesharing as a major example: when Uber and Lyft launched, many cities tried to regulate them like traditional taxi companies even though their business models were completely different, leading to years of confusion and legal disputes. A regulatory sandbox helps avoid those problems by allowing new businesses to operate under supervision while regulators learn how the business works and decide what level of oversight is necessary.
Early results suggest sandboxes can encourage competition and innovation without many of the harms critics predicted, making them an increasingly attractive policy option for states. The report concludes that regulatory sandboxes allow governments to keep pace with innovation without giving up oversight, letting businesses test new ideas under supervision while providing policymakers with evidence about what works. Utah's legal sandbox has helped inspire similar reforms elsewhere, including Indiana. For entrepreneurs without political influence or resources, challenging outdated rules is difficult, making regulatory sandboxes an important tool for innovation and competition.