California’s anti-sweepstakes bill navigated another Senate committee on Tuesday, but not without concerns from lawmakers.
Key Takeaways
- AB 831 passed by a vote of 10-0 and was referred to the Public Safety Committee.
- Several Senators who supported the legislation said there needs to be clarifying language around a few issues.
- California tribal nations spoke out for the bill, while opponents included sweepstakes operator representatives.
Assembly Bill 831, introduced by Asm. Avelino Valencia, “aims to close an existing loophole in law by prohibiting the use of sweepstakes casinos that utilize dual currency models,” the lawmaker said.
The legislation, sponsored by state tribal nations seeking sovereignty over gaming exclusivity rights, was passed by the Senate Governmental Organization Committee by a vote of 10-0 during a 45-minute portion of the hearing.
The bill will next be referred to the Public Safety Committee, and it’s expected to go to appropriations for changes before hitting the Senate floor.
“In recent years, online sweepstakes casinos have increased in popularity by exploiting no purchase necessary and use dual currency models to take advantage of a gray area in the law,” Valencia said. “Players are able to convert winnings into actual cash. By operating as an online casino with real cash payouts, these platforms are circumventing the will of the voters and sidestepping the state’s gaming framework.”
The anti-sweepstakes bill comes at a time when California is also cracking down on fantasy sports, but the two are not connected. The sweepstakes bill was first introduced in February and passed by the Assembly in early May. It didn’t pass its first Senate committee until June 10 and was placed on the inactive file on June 13. It was revived 10 days later and amended, but the Governmental Organization Committee received the current version of AB 831 over the weekend, Sen. Rosilicie Ochoa Bogh said.
Cleaning up language
Multiple committee members said they supported the bill because of the legal commitment to tribal gaming compacts. However, several Senators expressed issues with how quickly the bill was put together and said that while they support the legislation, they want to have time to hear from all stakeholders.
The legislation targets operators, payment processors, suppliers, and celebrity endorsers and comes with potential fines of up to $25,000 and a one-year maximum prison sentence. There was confusion among committee members on whether the bill also goes after sweepstakes casino customers, which Valencia said it doesn’t and will likely need language to clarify.
“I do believe that this bill does aim to strengthen our existing sweepstakes laws and address the ambiguity in our state law, so that is why I support the bill today,” Sen. Sabrina Cervantes said. “I do have concerns about the unintended consequences and just making sure there is some clarifying language as it relates to the criminalization or the misdemeanor penalties here for the individuals. Everything else in this bill I am in strong support of, and make sure that my comments are aligned with some of the other committee members here.”
Another issue arose when card room representatives asked for clarification on amendments. Currently, the legal form of gaming in California is part of the ban, but Valencia said there are changes coming to remove card rooms from the bill, which led to representatives of that gaming faction supporting the legislation.
Protecting California gaming
Two tribal leaders testified in front of the committee and spoke out against unregulated sweepstakes casinos that they say violate their gaming exclusivity, fail to protect or benefit California and its communities, and create criminal pathways.
“Allowing online sweepstakes casinos to continue operating in the state will destabilize the entire legal gaming ecosystem, leading to economic harm across the state,” said Isaiah Vivanco, chairman of the Soboba Band of Luiseño Indians and treasurer of California Nations Indian Gaming Association. “I hope you all understand that tribes are trusted stewards of gaming and ask that you stand with us to protect tribal gaming in the state.”
Other parties that showed up to support AB 831 included a faith-based organization against all California gambling, seven state tribes, and the Sports Betting Alliance (representing FanDuel, DraftKings, BetMGM, Fanatics Sportsbook, and bet365).
Backing the other side
Opponents included the Social Gaming Leadership Alliance (SGLA), Social and Promotional Games Association, Play Studios, Association of National Advertisers, and sweepstakes giant VGW.
Bill Gantz, a gaming attorney representing the SGLA, said nearly 20,000 Californians have spoken in favor of sweepstakes casinos, and there has been no consumer backlash or state regulatory intervention since sweepstakes gaming entered the market in 2012.
Gantz argued that sweepstakes gaming is a non-gambling product and that no study has shown an impact on land-based tribal casinos.
“We urge that the legislature take time to learn about this industry and find out what they’re authorizing and banning by adopting something like AB 831,” Gantz said.
