Share 
A California bill intended to ban sweepstakes casinos has passed a second Senate committee on a unanimous vote.
Members voted 6-0 to move Assembly Bill 831 forward at a July 15 hearing in the California Senate Public Safety Committee.
AB 831, authored by Assemblymember Avelino Valencia, would make it illegal for sweepstakes casinos that run on a dual virtual currency system, mimic gambling and offer opportunities to win cash or other prizes of value to operate in the state. If passed into law, entities found in violation would be charged with a misdemeanor and face fines of up to $25,000 and/or jail time.
Last week, the Senate Committee on Governmental Organization advanced AB 831 on a 10-0 vote.
Amendments will address concerns about bill’s scope
Many of the same stakeholders from last week’s hearing appeared at the Senate Public Safety Committee hearing to lend support or express opposition to AB 831.
Valencia provided an overview of the bill and also addressed some concerns expressed by senators and stakeholders at last week’s committee hearing. Namely, there were worries the bill could penalize individual players and companies indirectly involved with sweepstakes casinos (like payment processors and media affiliates), unintentionally target California cardrooms, and make traditional sweepstakes offered by businesses in the state illegal.
Valencia said he has negotiated some amendments to the bill to address those concerns.
“I am accepting committee amendments which will shield potential entities who unknowingly support online sweepstakes from liability. The amendments will also protect individual users of online sweepstakes games. Additionally, I am in active conversations with the cardrooms to ensure that they are not inadvertently captured.”
Johnny Hernandez Jr., vice chairman of the Yuhaaviatam of San Manuel Nation tribal council (a co-sponsor of the bill), told the committee that AB 831 would not criminalize traditional sweepstakes offerings, which has been an argument of those opposed to the bill.
“AB 831 does not make traditional and promotional sweepstakes unlawful. It solely targets the online dual currency models that mimic gambling and offer money and cash payouts.”
San Bernardino County District Attorney Jason Anderson also spoke in support of AB 831. Anderson said the measure would protect underage residents from gambling.
“In today’s digital age, increased access to online gambling and virtual betting coupled with the lack of strong age verification safeguards puts our youth at serious risk of developing crippling gambling addiction. The online sweepstakes companies operating a dual currency model addressed in this bill pose such a risk to our youth.”
Anderson also said AB 831 would only target operators and would not punish sweepstakes casino players.
“We are not seeking to penalize the player. Provisions in this bill are only intended to penalize the companies, often offshore, which are the source of this illegal gambling, who are operating these dual currency model games illegally in the state.”
Opponents call for more time
Bill Gantz, a lawyer testifying in opposition of AB 831 on behalf of Social Gaming Leadership Alliance, reiterated several points he made at last week’s committee hearing. He called for more time to consider the bill and possible related studies, and said the law would apply to “tax service providers, app stores, payment providers, banks, advertisers … anyone who somehow indirectly or directly supported the industry.”
Gantz said the proper approach to sweepstakes casinos would be to tax and regulate them.
“If California regulated and taxed this industry and took some time to study it and had a fulsome process, you would learn that rather than banning it, the state could collect at least $149 million of sales tax revenue a year.”
Also speaking in opposition to the AB 831 was David Jumper, chief marketing officer of ARB Interactive, which operates the Modo.us sweepstakes casino. Jumper said the sweepstakes casino industry contributes “hundreds of millions of dollars” to the California economy every year through marketing and advertising and there is “no evidence of harm.”
Jumper called for the legislation to be slowed down and considered further next year.
“We urge you to pause this bill, extend it to a two-year timeline and work with stakeholders to develop a thoughtful regulatory framework.”
If AB 831 doesn’t pass this year in the Assembly (its house of origin), it can be carried over to 2026, as the California Legislature operates on a two-year session.
Deadline looms
Legislators may not have a choice in carrying AB 831 over to 2026, as the last day for both houses to pass bills this year is Sept. 12. Throwing a wrench into plans to expedite the bill’s passage – both the Senate and Assembly will soon adjourn for a monthlong summer recess. The last day before the recess is July 18.
AB 831, which was introduced in late June, next advances to the Senate Appropriations Committee. The next scheduled hearing for the committee is Aug. 18.
That would leave less than a month for AB 831 to be passed through the Senate, then go through the committee process and a final vote in the Assembly.
Gov. Gavin Newsom, who could then either veto or pass AB 831 into law, could call a special session of the Legislature after Sept. 12 to continue work on designated unpassed bills. But Newsom has given no indication that passing AB 831 this year is a priority.
In fact, it’s unclear whether or not he would sign the bill if it reaches his desk.
