A group of tribal gaming leaders and attorneys are confident sweepstakes gaming operators will lose in California.
Key takeaways
- The Indian Gaming Association's conference chair believes sweepstakes operators don't have a case.
- A state Senate committee unanimously passed an anti-sweepstakes bill, AB 831.
- State AG Rob Bonta found daily fantasy sports (DFS) illegal in California
With a bill to explicitly ban sweepstakes casinos moving through the Golden State’s Senate with success, Victor Rocha, conference chair of the Indian Gaming Association, said during his webcast “New Normal” it’s only a matter of time before the controversial dual currency form of gaming is eradicated.
“California is the place this all ends,” Rocha said during Wednesday’s episode. “They just don’t have an argument.”
A state Senate committee unanimously passed Assembly Bill 831 (AB 831) Tuesday. California's Native American tribes sponsored the legislation. They're currently the only entities in the highly populous state that can offer gambling.
California joined numerous states in a battle against companies that offer online casino slots and table games, as well as sports betting, through coins both given and purchased. Some can be exchanged for cash and prizes, which tribes and state regulators consider gambling and a violation of compacts and laws.
“When you’re taking a step back and looking at this, this (sweepstakes) model threatens tribal exclusivity across the country,” said tribal litigator Joe Webster, a managing partner at Hobbs, Straus, Dean & Walker, LLP.
No clarity needed
While California’s legislature debates what bill sponsor and Assemblymember Avelino Valencia says would “close an existing loophole in law by prohibiting the use of sweepstakes casinos that utilize dual currency models,” the webcast’s panel said this form of gaming is already illegal.
While the Senate committee took issue with some of the language and requested clarity on aspects of the bill, tribal advocacy lawyer Scott Crowell disagreed.
“I support the bill, but I don’t know that you need additional clarity,” he said during the webcast. “The reality is that prior to this bill or without this bill, sweepstakes is still illegal in California. The problem is, regardless of how clear we are regarding the illegality of an activity, it continues.”
Webster shared a similar concern that operators won’t adhere to the law, and he said sweepstakes gaming companies have flourished in California due to a lack of legal challenges and market competition.
“From a broad public policy standpoint, this shouldn't be a hard sell to state regulators and state enforcement authorities to shut it down, particularly when the statutory language is, I think, abundantly clear,” Webster said.
As for eradicating sweepstakes operators in the Golden State, Webster and Crowell said it comes down to government enforcement, like sending cease-and-desist letters and taking legal action, whether AB 831 passes or not.
“Enforcement is the only thing these guys are going to understand,” Rocha said.
Fight against fantasy
California’s tribes are continuously battling numerous gaming-related issues. While sports betting legalization, which has to go through the state’s tribes, is on the back burner for a couple of years, daily fantasy sports sites are another current challenge.
“This is just another version of an old fight we’ve been having, which is technology moving faster than the speed of law,” Rocha said. “I can’t wait to sit at the table and help them redefine what this industry is going to be in the future.”
California Attorney General Rob Bonta recently released an opinion declaring many DFS games illegal under state law. Underdog, one of U.S.' major DFS operators, filed an injunction to halt Bonta’s opinion and continue operating in the Golden State.
The "New Normal” panel agreed with Bonta, specifically on DFS not being a game of skill, and said those operators are violating tribal gaming exclusivity. They also urged Bonta to take action and enforce his opinion, even though Gov. Gavin Newsom disagrees with Bonta’s stance.
“Hopefully, people will take this opinion and use it for the explosive impact that it should have to bring this activity to an end,” Crowell said.
