Protecting Californians
The bill’s author is Assemblymember Avelino Valencia, who has stated that the bill’s purpose is to protect Californians from unregulated online gambling and to uphold the state’s gaming compacts with tribal nations. The bill is co-sponsored by the Yuhaaviatam of San Manuel Nation and the California Nations Indian Gaming Association (CNIGA), reflecting strong support from a majority of the state’s tribes. They argue that these unregulated platforms undermine their exclusive right to offer gambling in California and pose risks to consumers due to a lack of oversight.
The Path to Becoming Law
Because of the “gut-and-amend” nature of its introduction, AB 831 must now go back to the California Assembly for another vote. It will need to pass two final hurdles to reach Governor Gavin Newsom’s desk:
- The Assembly Governmental Organization Committee: This committee will review the bill’s contents before it can proceed.
- A full floor vote in the Assembly: The bill needs the support of at least 41 of the 80 Assembly members to pass.
Given the bill’s unanimous support at every stage so far, its passage appears highly likely.
Key Provisions of the Bill
AB 831 would make it a misdemeanor to operate, conduct, offer, or promote an online sweepstakes game. The penalties for a violation include a fine of up to $25,000 and up to one year in county jail.
The bill also broadens the scope of potential prosecution to include any person or entity that “supports directly or indirectly” the operation of these games. This includes:
- Suppliers
- Affiliates
- Tech providers
- Payment processors
The language was recently softened to avoid affecting mainstream sweepstakes promotions unrelated to online casino-style games, such as those used by large consumer brands like Starbucks or Microsoft.
Industry Opposition and Tribal Divisions
The sweepstakes industry, through trade bodies like the Social and Promotional Games Association (SPGA) and the Social Gaming Leadership Alliance (SGLA), has pushed back against the bill. They argue it would outlaw a legitimate form of digital entertainment and undermine established legal precedents.
While most of the state’s large, land-based gaming tribes are in favor of the ban, some smaller, non-gaming tribes have voiced opposition. These tribes, including the Kletsel Economic Development Authority, Sherwood Valley Band of Pomo Indians, Mechoopda Indian Tribe of Chico Rancheria, and Big Lagoon Rancheria, see potential for partnership with sweepstakes operators as a way to generate revenue, which they haven’t significantly benefited from under the current tribal gaming framework. However, this opposition has not yet translated into significant political resistance.
Supplier Exodus and Legal Action
Even as the bill makes its way through the legislature, events outside of the Capitol are already impacting the sweepstakes casino industry. In late August, the Los Angeles city attorney filed a civil enforcement action against Stake.us for illegal gambling, also naming several of its major content suppliers. This lawsuit has already prompted a significant exodus of suppliers from the California market.
Following the lawsuit, several major suppliers have announced they are exiting the California market or the entire sweepstakes vertical:
- Pragmatic Play has moved to exit the sweepstakes casino vertical fully.
- Playtech has also confirmed it is no longer supplying social gaming operators in California.
- Other suppliers, including Evolution and Hacksaw Gaming, were also named in the Los Angeles lawsuit.
Blaise Luis
