California took a decisive step as its Assembly passed AB 831 with a 63-0 vote on the last day of its legislative session, setting the stage for Governor Gavin Newsom’s review. This bill, spearheaded by Assemblymember Avelino Valencia, declares it a misdemeanor to operate or support dual-currency sweepstakes sites that replicate casino or sports betting experiences. The movement aligns California with initiatives in other states, such as Connecticut, Montana, and New Jersey, which have also enacted similar prohibitions this year.
Initially, Valencia’s bill aimed to address distinct tribal gaming issues when it was introduced at the start of the legislative session. However, during the summer, the Senate amended it to extend its reach to sweepstakes casinos. The bill navigated through various committees and received unanimous support on the Senate floor.
Supporting the legislation, the California Nations Indian Gaming Association and numerous tribal entities within the state backed the initiative. Nonetheless, the bill faced opposition from four tribes who raised concerns.
Critics of AB 831, particularly from these tribes, argued that the “gut-and-amend” approach used to expedite the bill was a hasty measure to outlaw sweepstakes casinos. They expressed that this could inadvertently impact other businesses that engage in sweepstakes promotions, like McDonald’s and Starbucks. In response to these concerns, an amendment was introduced prior to the bill’s final reading in the Senate, explicitly ensuring that state lottery games and traditional sweepstakes promotions were excluded from the ban.
The dissenting voice, represented by Jeff Duncan, executive director of the Social Gaming Leadership Alliance, criticized the bill as being “flawed and rushed,” lacking comprehensive tribal agreement. He articulated that the bill might restrict economic opportunities for tribes and exacerbate already precarious economic situations. Duncan suggested, “California lawmakers should instead focus on establishing proper regulation that supports online social gaming, opens new revenue channels for the state, and safeguards economic prospects for all tribes.”
This development in California reflects a broader national crackdown on sweepstakes casinos. Across the United States, legislators and regulators have intensified their scrutiny of the industry, positing that operators exploit loopholes to provide gambling-like products. Typically, these operators employ a dual-currency model, where non-monetary “gold coins” coexist with “sweeps coins” that can be converted into real-money rewards.
While six states have successfully passed similar bans, not all have been fully enacted into law. In New York, for example, Governor Kathy Hochul has yet to sign S5935, although it passed both legislative chambers in June. Prior to the vote, New York’s Attorney General Letitia James issued 26 cease-and-desist orders to sweepstakes operators, reflecting the state’s growing impatience with regulatory evasion.
In contrast, Louisiana’s Governor Jeff Landry vetoed his state’s proposed ban, arguing that the bill was unnecessary for the state gaming regulator to enforce existing rules. In the wake of this veto, the Louisiana Gaming Control Board dispatched 40 cease-and-desist letters to unregulated operators, including those in the sweepstakes sector.
Other states, including Arizona and Michigan, have also taken steps to curb unregulated sweepstakes operations by issuing cease-and-desist notifications.
In light of these regulatory pressures, Eilers & Krejcik Gaming has adjusted its 2025 revenue forecasts for the US sweepstakes market, reducing projections from $4.7 billion to $4 billion. This revision accounts for the increasing legislative and regulatory challenges confronting the industry. Despite this downward revision, the market is still anticipated to experience a 16% increase year-over-year. However, analysts at Eilers & Krejcik predict a potential 10% decline in 2026, reflecting ongoing concerns about the sector’s sustainability under current regulatory trends.
This dual-currency model remains at the heart of the debate, with proponents arguing for its unique position between gaming and gambling, while critics argue it’s a thinly-veiled attempt to bypass more stringent gambling regulations. As the legislative landscape continues to tighten, the future of sweepstakes casinos hangs in the balance, with industry stakeholders and legislators alike watching vigilantly.
From a different perspective, proponents of the sweepstakes model argue that these platforms provide entertainment and social interaction without the financial risk associated with traditional gambling. They suggest that the model encourages participation through its accessible entry point, offering a unique blend of gaming excitement and community engagement.
Still, the broader legislative momentum seems to favor tighter controls and transparency. As states continue to reassess their positions on gaming and gambling, particularly where digital platforms are concerned, the outcomes will likely shape the trajectory of the sweepstakes industry for years to come.
Governor Newsom’s decision on AB 831 could thus serve as a bellwether for future regulatory approaches, both in California and nationwide, as lawmakers balance economic impacts, tribal sovereignty, and consumer protection in an evolving digital landscape. The coming months will be crucial in determining whether this trend towards increased regulation will dampen or reshape the industry.