Australian Social gaming operator Virtual Gaming Worlds (VGW) has signed a conditional agreement with the Kletsel Dehe Wintun Nation of the Cortina Rancheria, marking its first tribal partnership in California.
The agreement, made with the Kletsel Economic Development Authority (KEDA), enables VGW to host free-to-play social gaming systems and sweepstakes casino offers within the state. Leaders of the two parties stated that the alliance cements its commitment to responsible business and building a community.
Key Takeaways
- VGW to launch social gaming and sweepstakes platforms in California
- The agreement highlights opposition to a bill seeking to ban sweepstakes casinos in the state
- Smaller tribes argue that digital platforms provide critical revenue
The partnership goes forward amid controversy within California's tribal community regarding social gaming. While major gaming tribes and organizations support AB 831, KEDA argues that the bill threatens smaller tribes' ability to generate alternative revenue.
Eric Wright, CEO of KEDA, testified before the committee, stressing that the measure lacked full tribal consensus and undermined tribes' rights to pursue legitimate economic opportunities.
“We respectfully oppose AB 831. This bill lacks unanimous support among California tribes, has advanced without meaningful consultation with many of us, and threatens our inherent right to operate legitimate revenue streams to support our people,” said Eric Wright.
“We’ve operated in North America for more than a decade, creating not only great games, user experiences and entertainment but ensuring this is done safely, responsibly and at the highest level of standards, in line with our core value of ‘we do what’s right,’” said Laurence Escalante, Founder and CEO of VGW.
“We also welcome KEDA’s opposition to AB 831. As we’ve previously said, our focus is on respectful engagement with legislators and calling for the establishment of modern, appropriate regulatory structures that can benefit players and states alike - not rushed, flawed legislation with unintended consequences being pushed by parties with clear vested interests like AB 831,” Escalante added.
California AG declares daily fantasy sports illegal
The VGW-Kletsel partnership and opposition to AB 831 come as California intensifies its scrutiny of gaming platforms. Attorney General Rob Bonta recently issued a legal opinion declaring daily fantasy sports (DFS) contests illegal under state law. The opinion, requested by Assembly member Tom Lackey, is expected to heighten tensions between DFS operators and tribes that have long questioned the legality of these platforms.
Bonta stated that California Penal Code section 337a prohibits sports wagering and applies to DFS when players are located in the state, regardless of where operators are based. The opinion effectively categorizes DFS as unlawful gambling.
Other tribes, such as the Redding Rancheria, embraced the ruling, reaffirming their objections to daily fantasy apps in their current format.
The Office of Gov. Gavin Newsom, however, distanced itself from Bonta's position, saying the opinion had been issued unilaterally by the Attorney General. Newsom's spokesman went on to add that Newsom disagreed with the decision but supported increased stakeholder engagement in a constructive direction.
New Jersey enacts ban on sweepstakes casinos
California's ongoing debate mirrors developments elsewhere, with New Jersey moving against sweepstakes casinos. On Aug. 18, Gov. Phil Murphy signed A5447 into law, enacting an immediate ban on the platforms. The measure eliminates a potential loophole that would have allowed operators to continue until November, when the legislature reconvenes.
Initial plans had contemplated licensing and taxing sweepstakes casinos, but the eventual legislation decided on a blanket prohibition. Licensed operators, who saw their online casino and sports betting tax rate raised to 19.75% earlier this summer, now face fewer market challengers.
With Gov. Murphy's signature, New Jersey became the fourth state to implement a statutory ban, following Connecticut, Montana, and Nevada. Louisiana's governor previously vetoed a similar measure, but regulators there have issued more than 40 cease-and-desist letters targeting sweepstakes operators and offshore sportsbooks.
Mississippi has adopted the same enforcement approach, while legislative attempts in Arkansas, Florida, and Maryland did not advance.
