Bad news for sweepstakes casinos, as they are one step closer to getting banned in California. Bill AB 831 was voted by 36 senators in the upper house and passed onto an assembly committee.
On September 12th, the bill passed unanimously 63-0, and will now be passed onto the governor of the state, Gavin Newsom.
For sweepstakes casinos, this is a big issue as it would make their operation prohibited. Furthermore, the operation of two-currency casinos or sites that are set up to look and act like real online casinos and sports betting platforms will be considered a misdemeanor.
This marks a shift in the attitudes towards casinos and sports betting, and could have devastating effects for the sports betting community in the USA. States such as New Jersey already have similar but relatively new legislation against sweepstakes casinos. However, sports betting remains legal in all 50 states.
But with this bill being passed to the governor, all he has to do is sign it into law. What could this mean, and what else does the bill propose?
Bill AB 831: Why Does It Have Support?
Since the bill has unanimious support, meaning nobody in the Assembly voted against it, it could be passed into law. The bill has received lots of support from tribal gaming communities, because tribal casinos are a big part of the California gambling business.
For those who don’t know, these are casinos and gambling facilities, often on indigenous reservations, that are regulated by the Indian Regulatory Act of 1988. This means they do not operate under the American government rules.
Many tribal communities view sweepstakes casinos as rivals to their casinos and a threat to their livelihood. This is because sweepstakes casinos operate in a legally gray area, and they get away with a lot more with regard to licensing, as tribal casinos still need to comply with licensing and regulation checks.
Many tribes spoke out in support of the bill. Meanwhile, others argued the bill could stop potential everyday sweepstakes like the McDonald’s Monopoly. Lawmakers noted in the most recent session that a ban on sweepstakes casinos would not include lottery or sweepstakes promotions.
Are There Any Arguments Against The Bill?
Avelino Valencia, who proposed the bill, had a lot of opposition despite the verdict.
Jeff Duncan, executive director of the Social Gaming Leadership Alliance, called the bill flawed and rushed, and said it would “limit economic options available to tribes and worsen already fragile economic conditions”.
Instead, Duncan argues that lawmakers should try to create better regulation for online games that continues to generate money while protecting the tribes and their economic interests.
What About In Favour Of The Bill?
The scrutiny towards sweepstakes casinos in the last few years has arisen from the idea that providers and the sweepstakes casinos are using those two-currency models to provide gambling products. The dual currencies can be used to trade in coins for real-money prizes.
To some, this is considered bad and unethical because the lines between legal promotions and real-money gambling appear blurred. The use of the dual currency and exchanging for real prizes mimics the casino experience, but is unethical because they don’t face the same regulations, taxes, and duty to protect customers.
Those in favour of the bill argue that this legislation is needed to protect consumers from the risk and stop operators from taking advantage of legal loopholes.
Has the Bill Been Signed Into Law Yet?
No, the bill has not been signed into law by the governor yet. In some states, similar legislation has been voted in, but not signed into law. This means in those places, it is not illegal to operate sweepstakes casinos yet, but it very well could be if Newsom signs the bill into law.
Overall, this would mean a huge decline in the sweepstakes casinos market, which is worth over $3 billion, according to Eilers & Krejcik Gaming. If the ban has a ripple effect, this could mean that sweepstakes casinos become entirely illegal in the USA, although that would be a long road to drive down!
With this bill, we will have to see if Newsom agrees and signs it into law before we delve more into the story.
