In a landmark decision for the US gaming industry, California Governor Gavin Newsom has signed Assembly Bill 831, officially enacting the California
In a landmark decision for the US gaming industry, California Governor Gavin Newsom has signed Assembly Bill 831, officially enacting the California sweepstakes ban. The new law, which passed the state legislature with unanimous bipartisan support, represents a decisive and powerful crackdown on the controversial sweepstakes casinos model.
The signing of AB 831 on Saturday, 11 October, is a major victory for the state’s powerful tribal gaming coalition, which has led the campaign against what it views as a predatory and illegal “grey market” that operates without any of the consumer protections, oversight, or tax contributions of the legal gambling sector.
The California sweepstakes ban is specifically designed to close the legal loophole that sweepstakes casinos have exploited for years. These platforms operate on a “dual-currency” model, where players purchase valueless “gold coins” for entertainment but can also win “sweep coins” that are redeemable for cash prizes. AB 831 makes this model explicitly illegal.
The law’s scope is comprehensive, extending liability beyond the operators themselves. It also prohibits financial institutions, payment processors, geolocation providers, and media affiliates from knowingly supporting any platform offering sweepstakes gambling. Violators will face misdemeanour charges, including fines of up to $25,000. “ AB 831 closes every loophole,” commented Michael Hoenig of the Yuhaaviatam of San Manuel Nation.
California’s move is the most significant development yet in a growing national trend against sweepstakes gambling. It follows similar legislative bans enacted this year in major markets like New Jersey and Connecticut, and enforcement actions in a host of other states. With the nation’s most populous state now implementing a full prohibition, the long-term viability of the sweepstakes casinos model in the United States is facing an existential threat.
While industry opponents of the ban on sweepstakes, such as the Social Gaming Leadership Alliance (SGLA), argued it would cost the state a billion-dollar industry, lawmakers were ultimately swayed by the powerful and unified front presented by the tribal gaming associations and their allies in the regulated gambling space. As one tribal conference chairman noted, on the issue of eradicating the sweepstakes industry, the tribes and major regulated operators like FanDuel and DraftKings are “all on the same side.”
The enactment of the California sweepstakes ban (AB 831) is arguably the most significant blow yet to the controversial sweepstakes casinos model in the United States. As the nation’s largest state economy and home to a powerful tribal gaming industry, California’s decisive action creates an undeniable precedent that will likely accelerate the demise of this grey market gambling sector nationwide. The unanimous, bipartisan support for AB 831 demonstrates a clear political consensus that these platforms undermine established gambling regulation and lack adequate consumer protection. This move, following similar prohibitions in New Jersey and Connecticut, solidifies a national trend and sends an unambiguous message to operators, investors, and suppliers: the legal loophole exploited by sweepstakes gambling is rapidly closing across the US market.
The success of AB 831 is a powerful testament to the lobbying influence of California’s tribal gaming associations. Their ability to frame the issue as a defence of tribal sovereignty and regulated gambling, aligning their interests with commercial giants like FanDuel and DraftKings, proved decisive against the economic arguments put forward by the sweepstakes industry. This unified front between tribal and commercial regulated operators against a common grey market competitor is a notable dynamic. The comprehensive nature of the California sweepstakes ban, which targets the entire supporting ecosystem including payment processors and marketing affiliates, also provides a new template for other states seeking to eradicate these platforms. It signifies a shift from merely targeting operators to dismantling the infrastructure that enables them.
Looking ahead, the California sweepstakes ban raises critical questions about the future of social gaming and other grey market gambling models in the US. Will players migrate to fully illegal offshore sites, or will the ban effectively curb participation? The stringent penalties and the targeting of payment facilitators suggest enforcement will be robust. Furthermore, this decisive action could embolden regulators and lawmakers to scrutinise other grey market activities, such as certain daily fantasy sports (DFS) formats or prediction markets, applying similar logic about consumer protection and regulatory parity. The ban on sweepstakes in California is not just a state-level decision; it’s a potential catalyst for a broader re-evaluation of unregulated and quasi-legal gambling across the entire US market.
