In a decisive move, Governor Gavin Newsom signed Assembly Bill 831 on Saturday, marking a significant shift in the landscape of online gambling by banning dual-currency sweepstakes casinos in California. This legislation, which goes into effect on January 1, 2026, reflects a growing trend as the largest US state takes a hard stance against platforms that operate under the guise of offering online casino and sports betting products.
The new law is expected to eliminate approximately 20% of the sweepstakes industry’s US revenue, according to analysts at the Global Gaming Expo in Las Vegas. This major blow comes after California’s legislature unanimously approved the bill, sending a clear message that the state is not open to such gambling models.
West Virginia Delegate Shawn Fluharty highlighted the significance of the unanimous vote, noting that achieving such consensus in California is no easy feat. The overwhelming support underscores a powerful mandate against the sweepstakes sector, which many believe operates in a grey area of legality.
Tres York, Vice President of Government Relations at the American Gaming Association, criticized the sweepstakes model, stating that it is an overly complex strategy that attempts to skirt around traditional gambling regulations. He noted that the persistent operation of these sweepstakes undercuts the legitimacy of genuine sweepstakes and confuses consumers.
The bill follows actions taken by Los Angeles City Attorney Hydee Feldstein Soto, who in August filed a lawsuit against Stake.us, a prominent sweepstakes operator. Accusing the platform of being an illegal gambling site, Feldstein Soto emphasized the damaging effects on players, describing Stake.us as a “rogue and real money gambling racket.”
This lawsuit also implicated Stake’s suppliers and the streaming service Kick, many of whom promptly withdrew from the market. The G2E panellists pointed out that these suppliers are pivotal in the operation of sweepstakes casinos and are key targets in efforts to dismantle the industry.
This crackdown is not isolated to California. Similar legislative actions have occurred across other states such as Connecticut, Montana, and New Jersey, each implementing bans on online sweepstakes casinos this year. In Louisiana, despite Governor Jeff Landry’s veto of a bill banning sweepstakes platforms, the Louisiana Gaming Control Board has been proactive, sending 40 cease-and-desist letters to unregulated gambling sites, including sweepstakes operators.
In New York, while Governor Kathy Hochul has yet to act on similar legislation, state Attorney General Letitia James has sent 26 cease-and-desist orders to sweepstakes operators. The New York State Gaming Commission has been vocal about the need to address these unlawful operations, with Chairman Brian O’Dwyer expressing satisfaction at the steps taken to curb illegal gambling activities.
The sweepstakes industry is facing increasing pressure nationwide, with over 100 cease-and-desist letters being issued by gambling regulators across the country. States such as Arizona and Michigan have also been active in taking measures against the industry, contributing to a hostile environment for sweepstakes operators.
In light of California’s legislative action, Eilers & Krejcik Gaming revised its 2025 US revenue projection for sweepstakes casinos, lowering it from $4.7 billion to $4 billion. The firm anticipates a further 10% decline in 2026, indicating the significant impact these legal measures are likely to have on the market.
While the crackdown on sweepstakes casinos is gaining momentum, there remains a counterpoint from some industry advocates who argue that these platforms provide a form of entertainment that, when properly regulated, can coexist with traditional gambling avenues. They suggest that clearer regulations, rather than outright bans, could offer a balanced approach that safeguards consumers without stifling innovation.
However, as states like California take decisive action, it appears the tide is turning against sweepstakes casinos. The industry must now navigate a landscape fraught with legal challenges and declining revenues as more states join the movement to eliminate these platforms from their jurisdictions.
Topics: Louisiana · Virginia · Arizona · Sweepstakes Casinos · Michigan · California
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