California’s Onslaught Against Sweepstakes Secures Win in Senate, Assembly Next

California’s Senate has unanimously backed AB 831, a piece of legislation that seeks to outlaw sweepstakes social casinos in the state, arguing that they constitute a form of illegal gambling.

The debate about the issue has split the nation and tribal operators, with some siding with the business model and arguing that it is necessary for tax purposes and driving innovation. Others have lambasted the sector as a skilled way of dodging regulation and paying tax.

California’s Anti-Sweepstakes Momentum Gathers Steam, but Not Final Yet

The industry has acknowledged that bringing the current framework up to date was something that the business would happily work together with legislators to make happen, but cautioned that an outright ban would put at risk millions of Americans who have enjoyed the activity recreationally, by forcing them to look for unregulated alternatives.

Specifically, the AB 831 sponsored by Assemblyperson Antonio Valencia will now be sent to the lower chamber, the Assembly, for further discussion before it is brought to the government’s desk for ratification. Gov. Gavin Newsom has avoided giving any indication whether he would strike down the bill or usher it along into law.

At the same time, the Social Gaming Leadership Alliance (SGLA) has blasted the bill, calling it a flawed proposal that drew on populist notions rather than looking at the facts.

Down to the Wire: Will California Take an Anti-Sweepstakes Turn?

SGLA executive director Jeff Duncaun argued that if passed, the bill would only entrench the interests of powerful groups that are keen to retain their chokehold on the gaming and entertainment industry in California, and further argued that the bill sought to equate legitimate businesses with criminal enterprises.

“This bill threatens legitimate businesses with criminal liability, strips economically disadvantaged tribes of a key development opportunity, and ignores the potential for smart regulation to generate hundreds of millions in new tax revenue for the state. We urge the Assembly members to reject this misguided legislation and stand for equity, innovation, and tribal self-determination.”

 Should California push forward with the bill, and Gov. Newsom indeed signs it into law, California would become the second state to have outlawed sweepstakes, following a similar move by Gov. Phil Murphy in New Jersey. Legislative action is also underway in New York, where Gov. Kathy Hochul may yet sign a similar law.

At the same time, multiple reports have surfaced that players join sweepstakes contests with the sole purpose of winning real money prizes from the platforms, looking askance at the claim that users are motivated purely by entertainment reasons.