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In the wake of an opinion from California’s attorney general that threatens the future of daily fantasy sports (DFS) in the state, Indian gaming tribes are looking to score a second major policy victory that could threaten sweepstakes operations as well.
Assembly Bill 831 would prohibit sweepstakes casino-style games that utilize the dual-currency model that allows players to purchase game currency with no redeemable value and receive an equivalent amount of a second currency that can be redeemed for cash or prizes.
The bill is backed by multiple tribal nations in California and has cleared two Senate committees in the last two weeks ahead of the legislature’s summer recess, which begins on July 19.
“In recent years, online sweepstakes casinos have increased in popularity by exploiting no purchase necessary and using dual-currency models to take advantage of a gray area in the law,” said Assemblymember Avelino Valencia, a Democrat and the bill’s sponsor.
“These platforms are circumventing the will of voters and side stepping the state's gaming framework,” Valencia said.
Tribal leaders say that the sweepstakes operations provide little to no protections for responsible gambling and money laundering, and also violate the gaming exclusivity the tribes hold in the state through gaming compacts.
“Allowing online sweepstakes companies to operate casino-style games violates the intent of these agreements, which are founded on mutual benefit and exclusivity,” said Johnny Hernandez, vice-chairman of the San Manuel Band of Mission Indians.
"California voters have repeatedly rejected the expansion of online gaming to protect tribal exclusivity and public interest,” added Isaiah Vivanco, chairman of the Soboba Band of Luiseño Indians. “Allowing sweepstakes casinos to continue operating in the state will destabilize the entire legal gaming ecosystem, leading to economic harm across the state.”
In legislative headings, sweepstakes operators have pushed back against the characterization of a rogue offshore industry with no consumer protections.
“We are a U.S.-based company that pays taxes in California and across the country, and we operate with strong, responsible play standards, including age verification, spending limits, identity checks, and self-exclusion tools,” said David Jumper, chief marketing officer at ARB Interactive, which operates the Modo Casino and owns the famed Publishers Clearing House traditional sweepstakes brand.
“We work closely with trusted commercial partners, including Visa, MasterCard, and major American banks, who both expect and review these safeguards, contrary to the claims made by the sponsors of this bill.”
"This is not an unregulated industry, and it's not operating in the shadows,” Jumper added. “This is a mainstream entertainment supported by American jobs, American infrastructure and, most importantly, American investment.”
Bill Gantz, an attorney with Duane Morris representing the Social Gaming Leadership Alliance, which includes leading sweepstakes brands such as VGW and McLuck as well as payments provider Nuvei, characterized the bill as a rushed effort without any impetus such as consumer backlash or a law enforcement action.
“This is a bill by competitors to get rid of their competition, basically,” Gantz said, who alluded to free-to-play social casino games being offered by certain California tribes as well as other leading gaming operators.
“The sweepstakes operators are selling the same exact thing, and only the same thing, as the social casino platforms.
“Social casino is not being operated or offered under a compact, it is a non-gambling product and there has been no study or evidence of any kind to show that these particular products, whether it's social casino or social casino with sweepstakes, infringes or impacts land-based casinos on sovereign lands at all,” he added.
While the timing of the legislative push is notable given the recent attorney general opinion on fantasy sports, the two actions are not directly related, and bill sponsors emphasized that this legislation on sweepstakes does not affect fantasy sports at all, even though the closeness of the two issues has sparked confusion.
“Our offices are being inundated both on this bill and on the fantasy sports issue, and I know for a fact that there are some folks that are conflating the two,” said Senator Angelique Ashby, a Democrat.
Major daily fantasy operators have continued to operate in the state since Attorney General Rob Bonta’s opinion was released on July 3, although PrizePicks and Underdog have shifted away from their against-the-house "pick'em style" games to their respective peer-to-peer brands that they have utilized in other states where the model has been called into question either by legislators or regulators.
Other California senators voiced similar concerns raised by Gantz that the legislation was being rushed, particularly given that AB 831 was previously a bill regarding minor changes to tribal-state compacts that had been gutted and replaced with the new sweepstakes language in order to remain compliant with the state’s legislative deadlines.
“My understanding is that this bill will go through the process entirely,” Valencia said. “If it moves through the Senate, gets to the floor, it will have to go to the Assembly, go through the committee process on that side as well.”
“So, the only difference in this is the timeframe that this is moving through, but I do believe it gives us ample time to vet the issue, considering it is something that is impacting California as a whole.”
A favorable vote in the Senate Public Safety Committee on Tuesday (July 15) sent the bill to the Senate Appropriations Committee, which is not scheduled to meet until after the legislature returns from its summer recess on August 18.
California’s 2025 legislative session is scheduled to adjourn on September 12.
