Legislators in California have once again modified Assembly Bill 831 (AB 831), a proposal intended to prohibit online sweepstakes gaming, as discussions around its implications and range heat up.
This bill achieved clearance from its last committee on August 29 after initially passing the Assembly in a revised version earlier this year, and it was amended again on September 3 during its third reading and sent back for further deliberation.
Recent amendments confirm that in-store promotions from brands like Starbucks and McDonald’s will be exempt. The text states: “These provisions do not render unlawful game promotions or sweepstakes conducted by for-profit commercial entities on a limited and occasional basis as incidental advertising and marketing tools to genuine consumer sales.”
Moreover, lawmakers clarified that the law will not impact the California State Lottery or games run by licensed operators under the Gambling Control Act, substituting “gambling-themed games” with simply “gambling.”
A newly added Section 1 clarifies that the statute only pertains to those who “knowingly and intentionally” promote or facilitate dual-currency sweepstakes. Supporting entities like banks, payment processors, and geolocation companies are protected from legal action if they do not have prior knowledge of their involvement.
The bill stipulates that consequences will only apply to suppliers, platforms, and affiliates acting “knowingly and willfully.” Changes made in July assured that individual participants would not face criminal charges.
This legislation has strong support from the Yuhaaviatam of San Manuel Nation, along with other significant gaming tribes, and the California Nations Indian Gaming Association (CNIGA). Nonetheless, there has been pushback from smaller tribes, including the Kletsel Dehe Wintun Nation, which has partnered with social gaming operator VGW, and the Sherwood Valley Band of Pomo Indians, who voiced concerns that the ban could negatively affect smaller tribes exploring digital gaming.
Long-term sweepstakes operators like Publishers Clearing House and the California Cities Gaming Authority, representing cardrooms, oppose AB 831. Critics argue that this prohibition may exacerbate economic disparities and limit tribal sovereignty in online gaming. A representative from a cardroom previously testified that they anticipated a more favorable treatment in the legislation but instead found themselves exposed.
Sweepstakes casinos, offering cash-redeemable prizes while presenting as promotional contests, navigate a legally uncertain terrain akin to unauthorized online gambling. Several states across the U.S. have enforced crackdowns, with New York, Connecticut, Montana, Nevada, and New Jersey instituting formal bans, while Washington, Michigan, and Idaho maintain enduring restrictions. Delaware, Louisiana, West Virginia, and Maryland have compelled dozens of operators to cease operations through orders and subpoenas.
Massachusetts is also contemplating similar legislation, with House Bill 4431 proposing a comparable ban.