California Sweepstakes Prohibition Bill Passed by Legislature

• The California Assembly unanimously approved an amended bill to prohibit dual-currency sweepstakes
• The Senate approved the bill last week, but slightly amended the document
• It now heads to Gov. Gavin Newsom (D) to potentially be signed into law

Dual-currency sweepstakes games in California are one signature away from being prohibited in the Golden State.

The California Assembly unanimously approved an amended bill to prohibit dual-currency sweepstakes, voting 63-0 to approve AB 831 after being sent back for concurrence after being slightly amended by the Senate.

Assemblymember Avelino Valencia’s (D-68) bill prohibits dual-currency sweepstakes contests resembling casino and sports betting games in the state. The Assembly previously approved the bill, but had to concur with slight changes the Senate made to the legislation last week.

Dual-Currency Sweepstakes Likely on Way Out

The California Senate amended the bill on Sept. 3 to specify the legislation will not criminalize state lottery games or traditional sweepstakes promotions. The approved amendment from the Senate is as follows:

“This bill would specify that these provisions do not make unlawful or otherwise restrict lawful games and methods used by a gambling enterprise licensed under the Gambling Control Act or operations of the California State Lottery. The bill would specify that these provisions do not make unlawful game promotions or sweepstakes conducted by for-profit commercial entities on a limited and occasional basis as an advertising and marketing tool that are incidental to substantial bona fide sales of consumer products or services and that are not intended to provide a vehicle for the establishment of ongoing gambling or gaming.”

Valencia’s 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.

The bill also 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,” according to the legislation.

If the legislation is signed into law, 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.

SGLA Urges Bill Veto

The Social Gaming Leadership Alliance (SGLA) urged Gov. Newsom to reconsider the approved legislation and veto the document.

“It is incredibly disappointing that the California Assembly decided to pass AB 831. Beyond the fact that this bill would worsen economic disparities among California tribes, put California to the back of the line in terms of digital innovation in this space, and take away a popular form of entertainment for residents, it will immediately strip $1 billion out of the state’s economy,” said Jeff Duncan, Executive Director of SGLA.

According to the SGLA, the bill would eliminate $1 billion in annual economic impact to California, causing the state to miss out on at least $200 million to $300 million annual that regulation and taxation of the industry brings.

Several California tribes have also spoke out against the bill. These include the Kletsel Dehe Wintun Nation, the Sherwood Valley Rancheria of Pomo Indians, the Mechoopda Indian Tribe of Chico Rancheria, and Big Lagoon Rancheria.