California has joined the list of states that are cracking down on sweepstakes and social casinos. The new Assembly Bill 831 (AB 831), recently signed into law by Governor Gavin Newsom, bans the operation of online sweepstakes and social casinos.

AB 831 forms part of a broader plan to govern and regulate online gambling in California. Enforcement of the new law is not just limited to companies facilitating or promoting online sweepstakes, but extends to payment processors, gaming content suppliers, and affiliates promoting the platforms.

The bill has been praised by the local tribal gaming associations, who have stated that sweepstakes games and social casinos infringe on the exclusivity granted to tribal gaming by pacts made with the state legislature.

With US-based platforms pulling out of California ahead of the ban, it is expected that remaining online casinos and sweepstakes games based in the State will soon shut down. The complete ban of US-based gaming operators and developers is aimed at rooting out unregulated gaming models that operate like online casinos outside of state gambling laws.

As platforms withdraw from California ahead of the ban, the concern is that residents are migrating to alternative options. Several international platforms have mobile casino apps. While they operate outside of US regulations, they often feature the same gaming options, like slots, blackjack, and more present in sweepstakes casinos. Most of the apps provide faster payouts, a wider range of gaming options, and various bonuses and promotions that attract and retain an international audience. While this bill aims to remove the unregulated platforms, many of the apps are licensed and registered in reputable jurisdictions and are compliant with their gambling laws.

What is Assembly Bill 831?

This new bill criminalizes the operation of online sweepstakes casinos that use a dual-currency system (gold coins and sweepstakes coins redeemable for prizes). The bill is part of a strategy to crack down on unregulated online gambling activity in California. Proposed by AB 831 is the regulation or ban on sweepstakes casinos that resemble online gambling but do not operate within the legal gambling framework in California.

The criminalization extends to parties involved with the development, operation, or promotion of sweepstakes casinos in the State of California. The bill makes offenders guilty of a misdemeanor punishable by jail time not exceeding one year, or by a fine of no more than $25 000.

AB 831 could impact industries beyond online sweepstakes casinos. Platforms operating daily fantasy sports sites, like social casinos, are not regulated like online casinos approved by legislation. Critics of these platforms argue that they resemble gambling by allowing users to win prizes based on real-world sports results. This has resulted in California legislators looking into a full ban on these platforms.

Tribal Gaming’s Stake

Tribal gaming associations in California, such as the California Nations Indian Gaming Association, have been granted exclusive gaming rights in the State. These rights stipulate the rights of Tribal Governments to conduct and regulate gaming activities on tribal land. Exclusive rights were granted to tribal communities based on the principle that profits from tribal gaming would be shared with the State.

Representatives of tribal gaming associations have argued that the existence of online sweepstakes and social casinos encroaches on tribal gaming profits. Local tribal gaming associations brought disputes to officials in California, claiming that allowing US-based sweepstakes and social casinos violates terms set out in the Federal Indian Gaming Regulatory Act of 1988.

Significant lobbying efforts by tribal gaming associations have been backed by key tribes like the San Manuel Band of Mission Indians. Groups like the Indian Gaming Association played a key role in mobilizing tribal attorneys and gaming analysts by hosting meetings and webinars. The eventual passing of the bill has been celebrated as a landmark victory by Tribal Gaming Associations in California.

Opposition to the Bill

The passing of AB 831 does not come without significant criticism and opposition. Opponents of the bills have criticized the bill’s language for being overly broad. Associations like the Social & Promotional Games Association (SPGA) have been against AB 831 from the bill’s inception. They stated that the bill was vague, hasty, and dangerous.

The SPGA criticized the state for applying a blanket ban to the online entertainment industry without any discernment. They argue that the state provided no evidence of how online casinos and sweepstakes harmed consumers and failed to explain key terms, including “dual currency system” and “cash equivalents”.

Joining the SPGA in opposition to AB 831 are executives from online sweepstakes operators. Executives from the industry pointed out in an open letter to the governor that failing to regulate the industry will result in the state missing out on hundreds of millions of dollars of tax revenue.

Despite most Indian Tribes supporting the bill, there has been opposition from four non-gaming Northern California Tribes. The SGLA and other smaller tribal nations have also voiced their opposition to the ban, stating that the bill is anti-competitive and damaging to smaller tribes. Members of the SGLA went further by stressing that AB 831 could cost the economy of California an estimated $1 billion in revenue.

Members of the public also expressed their concerns about the bill. Polls indicated roughly 85% of California residents felt that the State should instead modernize laws and regulate online social gaming.

Despite significant opposition from many, Governor Newsom went ahead and signed AB 831 into law, which will take effect on January 1, 2026.

Implications for California

California has been against the legalization of online casinos. Passing AB 831 further cements the California State Legislature’s commitment to keep the state free from online gambling. With the closure of US-based online casinos and sweepstakes platforms expected by 2026, tribal gaming associations plan on regaining the revenue they lost to online casino platforms. Increased tribal gaming revenue leads to greater social investment from the tribal gaming associations. These investments are distributed to key development areas, including education, healthcare, and infrastructure.

AB 831 is the second consecutive legislative victory for tribal gaming in California. In 2024, a bill was passed that made provision for tribes to sue California cardrooms for violating exclusivity agreements. These massive legislative victories increased the exclusivity of tribal gaming rights in California.

The ban on online sweepstakes and social casinos also means that any advertising done for the industry will need to be removed, as advertisers will also face legal punishment under the new law. Local celebrities who endorsed online casinos and sweepstakes programs can also be punished under the new law.

Conclusion

Californians looking to participate in online sweepstakes and social casinos will now have to find alternative forms of entertainment and explore things to do in California. Those looking to play traditional casino games can still visit tribal gaming sites in the state. While sweepstakes programs are no longer available through online casinos, Californians can still find ways to access offshore mobile casinos. Assembly Bill 831 is poised to transform the gaming industry and economy in California. By banning online casinos and sweepstakes programs, California has added itself to the list of states opting not to regulate the online casino industry. Time will tell whether the ban will have positive or negative effects on the local gaming industry.