The California Senate this week became the latest US legislative chamber to pass a sweepstakes casino ban, advancing a prohibition bill unanimously on Monday.
AB 831 will now head back to the Assembly for concurrence after the 36-0 vote. The bill, which originated in the lower chamber, was amended with sweepstakes casino prohibition language after it reached the Senate. After the bill was amended, it passed through multiple committees, all unanimously.
The California legislature runs until Friday.
Prior to its third reading, senators amended the bill to exclude state lottery games and traditional sweepstakes promotions run by major companies like McDonald’s and Starbucks. Opponents of the bill had used those sweepstakes as examples of what would be included in the ban if the bill was passed.
Multiple state legislatures have passed sweepstakes casino bans this year, including Connecticut, Montana and New Jersey. Also, multiple state regulators have opted to send cease-and-desist letters to operators.
Opposition lines up for sweepstakes casino operators
The California Nations Indian Gaming Association and the Tribal Alliance of Sovereign Indian Nations support AB 831. The powerful gaming tribe the Yuhaaviatam of San Manuel Nation also supports the bill. San Manuel operates the Yaamava Resort and Casino in Highland, California and the Palms Casino Resort in Las Vegas.
California tribes have been successful in keeping outside gaming interests out of the state in order for gambling to operate by law only under tribal sovereignty. In 2022, the tribes defeated Proposition 27, a sports betting ballot initiative led by FanDuel and DraftKings. A combined $463.3 million was funnelled into the ballot fight, which saw Prop 27 receive just 18% of the vote.
Still, there are four tribes that have aligned with sweepstakes casino operators:
- Big Lagoon Rancheria
- Kletsel Dehe Wintun Nation
- Mechoopda Indian Tribe of Chico Rancheria
- Sherwood Valley Rancheria of Pomo Indians
Along with the four tribes, sweepstakes industry groups the Social and Promotional Gaming Association and the Social Gaming Leadership Alliance also strongly oppose the legislation. They said it is a rushed proposal and are unhappy about the “gut-and-amend” process by which it was introduced in the legislature.
“California voters didn’t sign on for backroom deals dictated by powerful political interests,” an SPGA spokesperson said. “With the state facing wildfires, a housing crisis and a full federal assault on Californians’ rights, it’s astounding that any lawmaker would make banning mobile games a priority.”
Suppliers leave California sweepstakes casino market
Since sweepstakes have garnered more attention from lawmakers in California, multiple suppliers and operators have left the state.
At the end of August, Los Angeles City Attorney Hydee Feldstein filed a civil enforcement action against Stake.us. Soto’s office alleges the operator violates several state laws and the Unlawful Internet Gambling Enforcement Act.
Multiple suppliers, including Playtech and Evolution, have removed their games from sweepstakes sites still active in the Golden State.
Prediction markets and DFS drawing eyes
California stakeholders have also recently taken issue with prediction markets and daily fantasy sites. That comes as more prediction market operators launch despite growing scrutiny by state and federal regulators.
Meanwhile, three California tribes are seeking a preliminary injunction against Kalshi and Robinhood. The Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians and the Picayune Rancheria of the Chukchansi Indians filed a lawsuit against Kalshi in July and asked for the preliminary injunction this week. A hearing is scheduled for 9 October in the US District Court for the Northern District of California.
The tribes argue Kalshi is offering illegal sports betting in all 50 states, including on tribal land. Robinhood now offers Kalshi’s football event trading markets. While Kalshi’s prediction markets are federally regulated by the Commodity Futures Trading Commission, gambling on tribal land is protected federally by the Indian Gaming Regulatory Act.
There are multiple other federal lawsuits involving Kalshi, with opponents contending it is offering illegal sports betting.
Earlier this year, California Attorney General Rob Bonta issued an opinion that daily fantasy sports games are betting. Governor Gavin Newsom did not agree with Bonta’s opinion.
While there has been no enforcement following Bonta’s opinion, DFS operators PrizePicks and Underdog went exclusively peer-to-peer in the state.
California lawmakers advanced AB 831, a bill banning sweepstakes casinos, with unanimous Senate support.