The sweepstake market in California is facing a complete ban. Bill AB 831 now only requires the signature of Governor Gavin Newsom.
The state Senate unanimously approved AB 831 on 12 September, and Governor Newsom now has until 12 October to either sign or veto the bill. The legislation introduces criminal liability for both sweepstake operators and their suppliers.
This decision continues the trend of action against sweepstakes in the United States. If signed, California would join Connecticut, Montana, Nevada, and New Jersey, where similar measures have already been adopted.
Nevertheless, operators of sweepstakes in California still hold out hope until Newsom makes his final decision.
In New York, the Senate also passed a bill to impose a ban, but Governor Kathy Hochul has not yet signed it. Meanwhile, Louisiana Governor Jeff Landry vetoed a similar bill, deeming it unnecessary.
Although AB831 has the backing of the Yuhaaviatam of San Manuel Nation and the California Nations Indian Gaming Association (CNIGA), other tribes in California have spoken out against it.
The Kletsel Economic Development Authority (KEDA), which recently entered into a sweepstake partnership with VGW, accused larger tribes of restricting digital opportunities for smaller ones.
Eric Wright, KEDA’s CEO, said in a letter to the California Senate Appropriations Committee: “Eliminating lawful, regulated digital opportunities will deepen these disparities, reduce self‐sufficiency, and undermine the State’s commitment to economic justice for all tribes. We urge the Committee to reject AB 831 and work toward legislation that expands – not restricts – opportunity for every tribal nation.”
The Social Gaming Leadership Alliance (SLGA), representing sweepstake operators, also opposed the bill, warning that its adoption would result in the loss of nearly 1,200 jobs and $1 billion in economic benefits for the state. Meanwhile, the Social and Promotional Games Association (SPGA) criticized the very process by which the bill was introduced.
AB831 was initially intended to amend tribal-state compact laws, but Assemblymember Avelino Valencia reworked it into a complete ban on sweepstakes.
The SPGA told iGaming Expert in June: “A last-minute effort to outlaw legal digital games, without public debate, expert input or economic analysis, sends a chilling message to entrepreneurs, innovators and investors across the state.”
The passage of AB831 by California’s legislature now appears to be the final blow for sweepstake operators in the state.
In addition to the looming ban, companies Stake.us and VGW are facing separate lawsuits.
Most notably, Los Angeles City Attorney Hydee Feldstein Soto filed a case against Stake.us on behalf of California residents. The lawsuit also targets several suppliers, including Evolution and Pragmatic Play. As a result, both companies severed ties with the U.S. sweepstake market, citing regulatory changes.
Evolution removed its content from Stake.us in California, while Playtech fully exited the state’s sweepstake market.
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