California Tribe Opposes Sweepstakes Ban, Partners With VGW

Although legislation to ban sweepstakes companies from operating in California’s virtual market has been introduced, one outlier, the Kletsel Dehe Wintun Nation, not only opposes the ban but has signed an agreement with Australian-based sweepstakes company Virtual Gaming Worlds (VGW).

Speaking Up Against the Ban

Eric Wright, CEO of the Kletsel Economic Development Authority, the economic gaming wing of the California tribe Kletsel Dehe Wintun Nation, spoke out against pending legislation that would ban sweepstakes companies from operating in the Golden State.

Senate Appropriations Hearing

At a Senate Appropriations hearing last week, Wright took aim at AB 831 and read into the public record the majority of a letter he sent to committee Chairwoman Anna Caballero.

“This bill lacks unanimous support among California tribes, has advanced without meaningful consultation with many of us, and threatens our inherent right to create legitimate revenue streams to support our people,” Wright said. “For tribes like ours—far from high-traffic tourism corridors—geography has always limited traditional economic development.

“Large, well-established gaming tribes already benefit from these geographic advantages and decades of success. It is self-serving for them to advocate for policies that restrict emerging digital commerce opportunities for others, effectively holding smaller and less advantaged tribes hostage to their location.

“Digital platforms offer one of the few viable ways for geographically isolated tribes to fund essential services: healthcare, education, housing, food security, and social programs. The need is urgent.”

Tribe Signs With VGA

The large gaming tribes that benefit from gambling have long advocated for exclusivity in all forms of gambling, including mobile sports betting, which hasn’t passed in California, while warning against sweepstakes companies that do not pay taxes or share in the proceeds of what is tantamount to digital gambling.

However, smaller, less influential tribes are rarely heard from, and the Kletsel Dehe Wintun Nation, through the Kletsel Economic Development Authority, wanted to be heard that its position is contrary to the larger gaming tribes.

Sweepstakes Alliance Position

Shane LaVigne of LaVigne Strategies represented an alliance of sweepstakes companies called the Social Gaming Leadership Alliance (SGLA), and he said the following:

“Instead of a prohibition of online sweepstakes, we should instead regulate and tax it, which could generate between $200 [million] to $300 million dollars a year in new revenue to the state of California, funding schools, healthcare, and infrastructure without raising taxes on families at a time when the state of California could desperately use new funding streams, all while ensuring consumer protections are in place to create a safe gaming environment.”

Current Sweepstakes Contributions

LaVigne also pointed out that sweepstakes companies pay north of $1 billion already to California companies and its citizens, citing a report from gaming industry analysts Eilers & Krejcik Gaming. According to the report, the breakdown is as follows:

• $731.9 million annually in marketing costs.
• $35.8 million annually in processing fees.
• $34.2 million annually in hosting fees.
• $208 million for salaries of California employees.

Laurence Escalante, founder and CEO of VGW, concurred with LaVigne and Wright, stating, “We’ve operated in North America for more than a decade, creating not only great games, user experiences, and entertainment but ensuring this is done safely, responsibly, and at the highest level of standards, in line with our core value of ‘we do what’s right.’”