California About to Become 5th State to Outlaw Online Sweepstakes Casinos

On a recent Friday, the California State Assembly voted unanimously in favour of amendments to AB 831, a significant bill aimed at banning online sweepstakes casinos, which are seen as simulating real-money gambling. This decision puts California in a group of four other states that have already outlawed such operations.

In a decisive 63-0 vote, the Assembly passed the Senate’s amendments without further debate. The original bill, supported by Assemblymember Avelino Valencia, sailed through the Senate on September 8, 2025, after several committee reviews. Furthermore, a recent amendment on September 3 specifically addresses protections for promotional sweepstakes operators.

The bill is now poised for Governor Gavin Newsom’s signature, which he must provide within 30 days. Should he choose not to act, the bill will automatically become law, with an effective date set for January 1, 2026.

Under the provisions of AB 831, those who violate this law could face misdemeanor charges, incurring penalties that may include fines up to $25,000, one year in county jail, or both. Additionally, the legislation specifies that third-party service providers—such as payment processors and content suppliers—can only be held liable if they knowingly support illegal lottery operations.

The Count So Far

As it stands, four other states currently ban online sweepstakes via legislation:

• Connecticut: SB 1235, effective October 1, 2025
• Montana: SB 555, effective October 1, 2025
• Nevada: SB 256, effective June 6, 2025
• New Jersey: AB 5447, effective August 14, 2025

Legislative efforts to impose similar bans were unsuccessful in Maryland and Louisiana earlier this year. Louisiana’s SB 181 was vetoed despite gaining approval from both chambers. Meanwhile, the Maryland bill failed to progress past the committee stage.

In New York, the bill S5935/A6745 was passed and sent to Governor Kathy Hochul, but it faced a pocket veto after the legislative session ended before the required action could be taken.

The Controversy

Online sweepstakes casinos claim that their platforms facilitate free-to-play contests, and their operators draw comparisons to traditional retail promotions like giveaways and discount codes. However, many critics argue these operations act just like unregulated gambling sites since users can purchase—often dual—virtual currencies to play games like slots and blackjack. Even more troubling is the option to convert these ‘sweeps coins’ into cash prizes, which heightens the blurring line between gambling and entertainment.

Blowback

Following the passage of AB 831, the Social Gaming Leadership Alliance (SGLA) issued a condemnation of the bill. Executive director Jeff Duncan argued that the legislation could worsen economic disparities among tribal nations, hinder digital innovation, and potentially take away $1 billion from California’s economy.

Duncan has called for Governor Newsom to veto the bill and to rather support online social gaming as a means for boosting tribal economic development.

Notably, several Northern California tribes with limited or no gaming operations have aligned with SGLA in their opposition:

• Kletsel Dehe Wintun Nation
• Sherwood Valley Rancheria of Pomo Indians
• Mechoopda Indian Tribe of Chico Rancheria
• Big Lagoon Rancheria

Conversely, the vast majority of California’s Indian tribes endorse AB 831, including the 13-member Tribal Alliance of Sovereign Indian Nations. This legislation represents a critical shift in California’s stance on online gaming and could initiate pivotal discussions nationally about digital sweepstakes platforms, the sovereignty of tribal nations, and the future of regulated entertainment.

In summary, California’s potential move to outlaw online sweepstakes casinos highlights the broader challenges facing this evolving sector of the gaming industry. With growing scrutiny and regulatory action, stakeholders will need to navigate the implications of such a shift, not only in California but across the country, as other states look to these developments to shape their own gaming laws.