California’s legislature unanimously passed a ban on online sweepstakes gaming on Friday, leaving the most populous U.S. state one step away from outlawing the vertical.
AB 831 passed by a vote of 63-0 on the Assembly floor on Friday, Sept. 12, the final day of the first year of the Golden State’s two-year legislative session. By the time all votes were counted, the final tally was 79-0.
Gov. Gavin Newsom has until Oct. 12 to either sign or veto the bill. If he does neither, it will pass in a “pocket signature.” There has been no public comment from the governor on the measure.
After being gutted and amended, AB 831 did not receive a single opposing vote in its entire Senate journey, and that pattern continued in the Assembly. Before it reached the floor, the Governmental Organization Committee approved the proposed prohibition 20-0 on Thursday, Sept. 11. despite multiple members expressing concerns that consumers were not being properly consulted on the change.
The Yuhaaviatam of San Manuel Nation, the California Nations Indian Gaming Association (CNIGA), the Sports Betting Alliance (SBA) and the California Chamber of Commerce spoke in favor of the bill. Opposition came from the Social Gaming Leadership Alliance (SGLA), its founder member and social gaming giant VGW, the Social and Promotional Games Association (SPGA) and smaller tribes, most prominently the Kletsel Dehe Wintun Nation of the Cortina Rancheria, whose economic development arm is now partnered with VGW.
Tribal fault lines emerge again in committee
Both the gut-and-amend bill’s sponsor, Assemblymember Avelino Valencia, and Yuhaaviatam representative Juan Herrera stressed that the last amendment to the bill clarified that it targets only dual-currency sweepstakes that resemble gambling and offer payouts, not the kind of promotions run by non-gambling entities.
On the other side, the SGLA’s Shane Levine pointed to a supposed $1 billion in economic activity that would be lost if the bill passed. He said sweeps operators have been rebuffed in their efforts to propose a framework for regulatory oversight that could generate up to $300 million in annual revenue and protect consumers.
Levine and Kletsel representative Eric Wright also accused major gaming tribes of trying to stamp out competition.
“The bill isn’t about clarifying the law,” asserted Levine. “It’s about changing the law and claiming sweepstakes is gambling to give a few wealthy tribes exclusivity while shutting down a legal industry that generates significant economic activity across California.”
“We didn’t win the geographic lottery that blessed some tribes with prime casino locations near major tourism and population centers,” added Wright. “It’s deeply troubling that tribes who’ve already achieved massive success through location advantages now seek to slam the door shut on emerging opportunities for those of us who weren’t blessed with prime real estate.”
Won’t somebody please think of the consumers?
While the bill passed in committee, it wasn’t without pushback. Assemblymember Diane Dixon and Chair Blanca Rubio were vexed by the lack of public testimony from the consumers themselves, while the Chair also expressed her irritation at the issue being pushed via a “last-minute” gut-and-amend maneuver.
“What are we really trying to accomplish?” Dixon asked. “Are we really trying to help consumers who unwittingly get involved in dual-currency gaming? I’m just struck by the fact there’s no consumer interest represented. I don’t see any letters from a consumer group in the packet.”
Ultimately, a clear message from the committee members was that they feel they are hearing too much from the stakeholders and not enough from the public.
“I encourage all of us to start working with some of those consumer groups, because I know this is not going to be the last bill we hear on this topic,” concluded Rubio. “I do foresee that this issue is going to continue with not just sweepstakes, but other forms of online gaming.”
Despite those concerns, California is the latest (and biggest) state to approve a full ban on sweepstakes gaming. The governors of Connecticut, Montana, Nevada and New Jersey signed similar measures into law earlier this year. Another approved ban, in New York, is awaiting the governor’s sign-off.
