California Bill Banning Sweepstakes Casinos Advances To Governor Newsom’s Office

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California is possibly about to become the fifth state to outlaw online sweepstakes casinos after the state legislature unanimously passed Assembly Bill 831 (AB 831). The bill is now being sent to Governor Gavin Newsom’s desk for final approval. 

If signed, the bill will change how the state approaches online gambling and place California at the forefront of the national effort to regulate or ban the dual-currency model used by sweepstakes casino websites.

The Legislative Effort

AB 831 was introduced by Assemblymember Avelino Valencia. It passed the Assembly 63-0 on the final day of the legislative session, after clearing the Senate 36-0 just a couple of days earlier. The bill makes it a misdemeanor offense to operate or knowingly assist “dual currency” sweepstakes casinos, which offer free-to-play games using “gold coins” while also selling “sweeps coins” that can be exchanged for real money. 

Supporters are arguing that the bill closes a loophole that enables online operators to offer casino-style games outside of California’s strict regulatory framework. These platforms have become very popular over the last few years, attracting players who enjoy the entertainment value of slots, blackjack, and poker-style games. The sweeps model has been praised by players as offering a low barrier way to enjoy casino games from home. 

Tribal Support And Division

The California Nations Indian Gaming Association (CNIGA) and many other local tribes have been vocal supporters of AB 831. They believe that sweepstakes casinos undermine tribal exclusivity agreements that are important to provide funding to community programs.

However, the bill has divided Indian Country. Several Northern California tribes, including the Kletsel Dehe Wintun Nation, Sherwood Valley Rancheria of Pomo Indians, Mechoopda Indian Tribe of Chico Rancheria, and Big Lagoon Rancheria, opposed the measure. They argued it would limit economic opportunities for tribes with smaller or no gaming operations. 

Jeff Duncan, Executive Director of the Social Gaming Leadership Alliance (SGLA) said of the bill, “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 $1bn from the state’s economy.”

The SGLA has called on Governor Newsom to veto the bill and instead explore regulated frameworks that will allow sweepstakes casinos to operate under state oversight.

Regulatory Context In A National Trend

California’s legislative move is part of a broader national crackdown on sweepstakes casinos. Connecticut, Montana, Nevada, and New Jersey have already enforced similar bans. Several other states have also issued cease-and-desist letters to unregulated sweepstakes websites before a bill banning the practice passed both chambers earlier this summer. 

Eilers & Krejcik Gaming recently revised its 2025 revenue forecast for the US sweepstakes market down to $4 billion. It is a 16% year-over-year increase but lower than the previously expected $4.7 billion. This is not a result of users leaving the platforms, but instead a result of stricter regulations. Analysts expect the sector to shrink by another 10% in 2026 as more states pass legislation similar to AB 831.

Industry supporters believe that an outright ban is not the best solution. “What California lawmakers should focus on instead is creating proper regulation that supports online social games, creates new revenue sources for the state, and protects economic opportunities for all tribes,” Duncain said prior to the Assembly vote. 

What Happens Next?

Governor Newsom has 30 days to sign or veto the bill. If he takes no action, AB 831 will automatically become law and take effect on January 1, 2026. Sweepstakes operators and game providers who violate the law could face misdemeanor charges, up to $25,000 in fines, one year in county jail, or both.

The final version of the bill includes language protecting promotional sweepstakes from big brands like McDonald’s and Starbucks, as well as state lottery games. This was after amendments to the bill, prior to which industry groups warned that the initial draft could have unintended consequences for marketing promotions.

The Social and Promotional Games Association and SGLA continue to lobby the Governor’s office for a veto, as this will give lawmakers more time to consider a regulatory framework instead of a ban.