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California Gov. Gavin Newsom has signed Assembly Bill 831, the unanimously-passed legislation banning sweepstakes casinos in California.
Newsom signed the legislation into law on the last day a governor must act on a bill. He could have vetoed the bill, let it become law without his signature, or signed it.
The signature came despite the Social Gaming Leadership Alliance (SGLA) issuing an open letter to Newsom on Sept. 25, the day after the bill was sent to his desk. It read, in part, “AB 831 chooses destruction over opportunity,” and claimed that AB 831 becoming law would immediately eliminate:
- $732 million in annual marketing spend by platforms like Meta and Google
- 1,200 high-paying technology jobs
- More than $70 million in technology infrastructure and cloud services spending
- Millions in current and future tax contributions
Group says California will lose $1B immediately
SGLA Executive Director Jeff Duncan told Legal Sports Report that California will now suffer a major financial hit.
“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. ”
The SGLA was organized by sweepstakes giant VGW “to unite interactive entertainment leaders, service providers, and players to advance free, safe, and engaging online social games,” according to the SGLA website. The group purports to stand for making sure sweeps games are free to play, promote responsible social gameplay, and protect players by implementing “robust security protocols and data protection standards that meet or exceed industry requirements.”
The Kletsel Dehe Wintun Nation of the Cortina Rancheria California tribe recently partnered with VGW to operate a free-to-play online sweepstakes casino in California. The tribe was vehemently opposed to the ban. What happens with the partnership now is uncertain.
Efforts by the SGLA and the tribe were not enough to stave off the new law, which takes effect Jan. 1. While most sweepstakes casinos are banned, legislators did create an exception allowing “game promotions or sweepstakes conducted by for-profit commercial entities on a limited and occasional basis,” like sweepstakes-style promotions from companies such as McDonald’s and Starbucks, to continue.
Bill sponsor: Tribes’ gaming rights were at stake
Assemblyman Avelino Valencia (D-Anaheim), who introduced the legislation, said its passage was necessary to protect tribal gaming rights.
The California Nations Indian Gaming Association strongly backed the bill.
In June, Valencia said banning sweeps was key to tribes remaining sovereign in California.
“We cannot look the other way while these platforms exploit legal gray area. These operations undermine the voter-approved framework that affirms tribal governments’ sovereign right to conduct gaming in California. AB 831 strengthens that framework and ensures gaming in California remains fair and accountable.”
Signing defied some speculation
There was some speculation that Newsom would veto the bill. In July, California Attorney General Rob Bonta declared daily fantasy sports illegal in the state. In his opinion, Bonta said all DFS games, including “pick’em” and draft-style contests, are prohibited in the state.
While California tribes were divided on AB 831, most applauded Bonta’s ruling. Newsom appeared to question it, according to his spokesperson.
“The attorney general, in his independent capacity, issued this opinion – not the governor’s office. While the governor does not agree with the outcome, he welcomes a constructive path forward in collaboration with all stakeholders.”
Victor Rocha, conference chair of the Indian Gaming Association, speculated that Newsom’s political aspirations might figure into a veto decision.
“He wants to be president, so he doesn’t want to [anger] the 18-35 demographic.”
Even so, Rocha posted to X on Sept. 13 that the demise of sweepstakes casinos in California was assured.
“There is no scenario where the sweepstakes gambling industry survives California. There is no veto. There is no deal to be made. Only the sweet release of death.”
Some companies have already unplugged California access to their sweeps games ahead of the bill becoming law.
