What exactly is going on behind the scenes of the push to ban online sweepstakes casinos in California, who would the bill punish, what even is social casino gaming and why is the state having this conversation right now at such short notice?
These were all questions that emerged at the first Senate hearing of AB 831, the overhauled bill authored by Assemblymember Avelino Valencia and backed by California tribes that would explicitly outlaw all casino-style or sports betting-style sweepstakes.
On Tuesday, July 8, Governmental Organization Committee members ultimately approved a motion to pass the bill to the Public Safety Committee, where it could be heard as early as next week. But the green light, which came in a 15-0 vote, wasn’t without some rigorous inquisition from lawmakers.
I’ve looked at clouds from both sides now
At the hearing, several parties either testified at length or voiced simple shows of support or opposition to the bill, which is co-sponsored by the San Manuel Band of Mission Indians.
Supporters included:
- California Nations Indian Gaming Association (CNIGA)
- Numerous individual tribes
- California Coalition Against Gambling Expansion
- Sports Betting Alliance
Opposition came from the likes of:
- Social Gaming Leadership Alliance (SGLA) and Social and Promotional Games Association (SPGA)
- World Poker Tour (WPT)
- California-based Play Studios
- VGW
- Association of National Advertisers
- Communities for California Card Rooms Coalition
One of the most notable opponents was the WPT, particularly given recent headlines around its own sweepstakes poker product, ClubWPT Gold. WPT CEO Adam Pliska was one of two lead witnesses for the opposition but quickly ran out of time in his testimony and ultimately hurried to a conclusion that WPT would like to be involved in conversations moving forward.
California card rooms also voiced concerns about the bill but said they were heartened by conversations with the sponsors that the bill could be amended by the next committee to ensure card rooms are exempt from enforcement.
Take your time, hurry up
The other lead opponent, SGLA legal representative Bill Gantz, made better use of his time.
He built on the scrutiny of San Manuel-owned Yaamava’ Resort and Casino, which operates an online social casino called PlayOnline, by noting that another proponent of the bill, Light and Wonder, has its own social casino offering.
“This is a bill by competitors to get rid of their competition,” Gantz stated.
Asserting that the sweepstakes vertical has not seen any law enforcement action or cease-and-desist notices in California, he argued that the “rushed basis” of the gut-and-amend nature of the bill meant that nobody had time to adequately study it, its impacts or its consequences.
The concern of timing was echoed by several senators, even those who voted yes to advancing the legislation minutes later.
“I’m a little disappointed that I just learned about it two weeks ago,” noted Sen. Susan Rubio. “It’s almost like it’s a little bit last-minute.”
The session’s Vice-Chair Suzette Martinez Valladares and Chair Rosilicie Ochoa Bogh both suggested that a bill like this shows exactly what’s wrong with the gut-and-amend process, wherein a bill that has already made progress (this one has already been through the Assembly) is entirely overhauled mid-session.
“The question arises as to the urgency,” said Bogh. “Why we are doing this so quickly? Because this could be very, very impactful in a large area … These are the concerns I have with gut-and-amend; we don’t have an opportunity to vet thoroughly.”
Cards hidden up sleeves?
As well as the inevitable discussion about the mechanics of social casinos and sweepstakes and whether or not they should be deemed lawful, an intriguing aspect of the discussion was the suggestion from numerous speakers that talks are in progress about potentially exempting card rooms from this bill.
Valencia emphasized that he is committed to continued stakeholder conversations, including with the card rooms, “to ensure that those issues are mitigated.”
Sen. Rubio pulled up Valencia on those comments later in the hearing.
“I think I’ve heard three or four people talking about amendments that are going to be taken in Appropriations,” she said. “I’d like the courtesy of knowing what those amendments are …”
Valencia responded that the intent is to ensure that providers of legal games are not punished, as well as to address the specific concern of the cardrooms.
Will players be punished?
The question of who the bill would seek to punish was another that got plenty of play in Tuesday’s hearing.
Like anti-sweeps legislation in some other states, AB 831 doesn’t just target sweeps operators and promoters but any person, entity, financial institution, payment processor, geolocation provider, gaming content supplier, platform provider or media affiliate who directly or indirectly supports them.
Speaking as a lead witness in support, San Manuel Vice-Chairman Johnny Hernandez, stressed that the bill is “very specific” in that it is designed to target only online sweepstakes platforms that mimic gambling through a dual-currency system and offer cash prizes.
But Sen. Angelique Ashby, who asked several questions in the latter portion of the hearing, noted she was concerned that players themselves may end up facing misdemeanor charges, something she said “would be deeply troubling to me.”
“You need to tighten up the language around who the criminal penalties, fines and fees will apply to to make sure we protect Californians who don’t incidentally stumble upon some online gameplay and then find out they violated the law unintentionally,” Ashby told Valencia. These concerns that were echoed by Chair Bogh and Sen. Sabrina Cervantes.
Ultimately, given the short timeframe and questions left unanswered, Bogh ended by noting that she would give the bill “the benefit of the doubt,” but not without reserving the right to change her vote down the line, particularly on the Senate floor.
