The California Senate recently passed AB 831, which would ban dual-currency sweepstakes, and the Assembly did so as well by a 63-0 vote on the last day of the legislative session. Now the bill will become law by October 12th if Governor Newsom does not veto it.
The measure brings California in line with a national trend toward increased regulatory scrutiny of unlicensed gaming in the fast-evolving digital space, and positions the Golden State as a leader in enforcing clear gambling boundaries.
Legislature Bans Sweepstakes
Dual currency sweepstakes have been in the crosshairs of legislatures recently, as gaming tribal nations and gaming companies in general have complained that they are unlicensed and are pilfering gambling dollars that should be rightfully theirs.
By cracking down on dual-currency models, lawmakers seek to shore up voter-approved gaming frameworks and protect the sizable investment tribal governments have made in the California casino market.
Lawmakers in Connecticut, Montana, Nevada, and New Jersey have already banned dual currency sweepstakes, while New York is waiting on the governor’s signature. Louisiana also banned sweepstakes, but Governor Jeff Landry vetoed the measure, arguing that the Louisiana Gaming Control Board already had the means to ban those sweepstakes operators.
The Louisiana regulatory board subsequently issued dozens of cease-and-desist orders to those sweepstake companies. Gaming regulators in Michigan and Mississippi have also issued cease-and-desist orders. These collective actions point to growing coordination among state regulators nationwide as they confront novel gambling models online.
California’s Gaming Integrity at Stake
AB 831 was sponsored by Assemblymember Avelino Valencia, and he articulated his position on the bill through a statement he released that stated, “These operations undermine the voter-approved framework that affirms Tribal governments’ sovereign right to conduct gaming in California.
AB 831 strengthens that framework and ensures gaming in California remains fair and accountable.” The bill’s passage reflects overwhelming legislative confidence in aligning state policy with the interests of sovereign tribal governments.
The gaming tribes were also in support, as the bill was hailed by the California Nations Indian Gaming Association (CNIGA) and the Yuhaaviatam of the San Manuel Nation. Many believe this new law restores a level playing field and affirms decades of successful tribal gaming regulation in the state’s competitive landscape.
“For over 25 years, tribal governments like Yuhaaviatam of San Manuel Nation have upheld the will of California voters by operating gaming with integrity. Illegal online gaming now threatens this foundation – compromising voter-approved law and putting Californians at risk,” said Yuhaaviatam Chairwoman Lynn Valbeuna. Many lawmakers considered the interests of voters and the sovereignty of tribes paramount in their push for this legislation.
Will Newsom Intervene?
AB 831 received overwhelming legislative support as lawmakers recognized that the bill was backed by the California Nations Indian Gaming Association (CNIGA). Some observers say that with such a decisive vote, it is unlikely the governor would step in, but industry insiders still watch closely as the deadline approaches for a possible veto.
Its leadership was vocal about maintaining tribal sovereignty and the exclusive right to offer casino gaming in the Golden State. The gaming tribes believed dual currency sweepstakes competed for California’s consumers’ gambling dollars without a license, posing a direct challenge to the legal casino establishment and its revenue streams.
However, the bill does not become law until October 12th, even if Governor Newsom doesn’t sign the bill. The only way AB 831 can be derailed is through the governor’s veto. The Social Gaming Leadership Alliance (SGLA) is lobbying Governor Newsom to do just that, arguing that California will lose $1 billion of economic impact that sweepstakes companies generate annually. Opponents argue that not all economic activity attributed to sweepstakes can be replaced by existing legal products, and predict job losses should the law go into effect.
Gaming consultancy agency Eilers & Krejcik was commissioned to conduct a study on the topic, which is where the $1 billion figure originates. The agency derived that amount based on the following:
- $739.1 million spent by sweepstakes to advertise through California-based companies
- $208 million in non-sweepstakes gaming household earnings through jobs at companies that work with the industry.
- $35.8 million in processing fees paid annually to California-based companies
- $34.2 million in cloud hosting costs paid to California-based data centers.
Stay tuned for the latest updates on this and other major industry developments, including the top-rated sportsbooks.
