Last Friday, California Gov. Gavin Newsom signed a sweepstakes casino ban into law. The law will take effect beginning on Jan. 1.
The signing comes after the state senate and assembly both unanimously passed a bill prohibiting dual currency sweepstakes casino-style gambling. Additionally, AB 831 extends the ban to payment processors, geolocation providers, content suppliers, and affiliates.
The new law is expected to upend the industry, which will no longer be able to offer sweeps gaming in the country’s most populous state.
For poker players, the ban cuts down on their online poker options. Sweepstakes-style online poker rooms like Global Poker and ClubWPT Gold were a big chunk of the Golden State’s viable choices.
However, ClubWPT Gold recently changed its business model and may be able to avoid this ban. Now, instead of offering gold coin games, players purchase poker training credits to play and redeem winnings for cash or prizes.
Other states have also prohibited sweepstakes platforms recently. New Jersey was the most recent state to implement a ban. Connecticut and Montana also passed bans this year. Several other states have introduced bill targeting the industry as well.
Tribes Have Mixed Feelings Over The Ban
The California Nations Indian Gaming Association backed the legislation. They, and other critics, argue the platforms offer casino-style gaming with a dual-currency system meant to circumvent state gambling laws.
However, some non-gaming tribes opposed the ban, arguing that partnerships with the platforms could benefit their citizens. The Social Gaming Leadership Alliance was hoping Newsom would veto the bill. the industry trade group favored regulating the industry in the state.
The SGLA warned that California was missing out on $1 billion in annual economic impact from sweepstakes games, and $200-$300 million in potential tax revenue.
The group also pointed to a study that found 89% of Californians believe sweepstakes gambling should be legal. Moreover, 34% of those favor regulation and taxation. Another 62% of Californians viewed the industry favorably, with 84% of gamblers viewing the industry favorably.
“Voters, players who love online social games, California tribes, and online social games operators all made their position clear: they didn’t want a ban on this popular, safe form of entertainment,” SGLA executive director Jeff Duncan said. “We hoped that Governor Newsom would see past the anti-competitive efforts of the powerful, well-funded tribes behind this bill and veto AB 831, but he chose the easy, short-sighted path, and turned his back on choice, innovation, and economic gains.”
The law leaves an out for third-party providers by noting they must knowingly and willfully support an unlawful sweeps platform.
