California Committee Moves Sweepstakes Banning Bill Forward

• A bill to ban sweepstakes in California has been moved forward in committee
• The Senate Governmental Organization gave the bill a favorable 10-0 vote with five abstentions
• AB 831 is a modified tribal gaming compact bill to officially ban sweepstakes contests in the Golden State

California legislators have taken the first step to banning sweepstakes competitions in the Golden State.

Members of the Senate Governmental Organization yesterday moved AB 831, a bill to ban any and all dual-currency sweepstakes games in the state, out of committee by a 10-0 vote with five abstentions.

The bill, originally dealing with tribal state gaming compacts, was overhauled in late June to make it unlawful for any person or entity to operate, conduct, or promote a dual-currency online sweepstakes game that mimics casino games or sports betting.

Bill Moves Forward

Members of the committee moved the sweepstakes prohibition bill forward to the Senate Public Safety Committee, where it will have its next public hearing on Tuesday, July 15.

Assemblymember Avelino Valencia (D-68) modified the original bill after it was declared inactive by the Senate last month. In addition to prohibiting dual-currency sweepstakes games, the bill outlines potential fines and punishments for those who offer the games.

“The bill would make a person who violates these provisions guilty of a misdemeanor punishable by a fine not less than $1,000 nor more than $25,000, or by imprisonment in the county jail not exceeding one year, or by both the fine and imprisonment.”

The bill also outlines the type of sweepstakes games that will be prohibited in California. Games that allow a person to purchase “sweepstakes coins” or other types of sweepstakes currency that allows the user to win a prize, award, cash, or cash equivalents will be prohibited.

Additionally, any games that simulate gambling or play a gambling-themed game, such as slot machines, video poker, casino-style table games such as blackjack, roulette, craps, and poker, will be prohibited.

The legislation is backed by the California Nations Indian Gaming Association (CNIGA), which sent two representatives to the public hearing to support the legislation.

Will Legislation Ban Legit Sweepstakes?

According to the Social and Promotional Games Association (SPGA), the legislation fails to define key definitions that qualifies an “online sweepstakes game,” which means popular sweepstakes competitions from Starbucks and Robinhood will be prohibited if approved.

“Before California creates new crimes, restricts speech, and disrupts legitimate businesses, the legislature should take a more thoughtful and transparent approach and make this a 2-year bill. Disrupting an entire legal industry in less than two months without adequate debate, education, public outreach, and evidence supporting the proponent’s arguments seems extremely short-sighted and irresponsible,” an SPGA representative wrote in a letter to Valencia.

The SPGA representative described the bill language as too “open-ended” that it can apply to a wide range of mainstream digital promotions and reward systems if approved.

Definitional flaws of the bill language make it “impossible to apply fairly” to legitimate businesses.

“Vague legal thresholds, circular definitions, and undefined key terms create a situation where ordinary promotional activity could unintentionally become criminal. Clear legal boundaries are essential when drafting laws that impose jail time and six-figure fines. AB 831 does not meet that standard.”