The California Sweepstakes Ban Is Here

Say goodbye to California sweepstakes casinos. They are going to be banned from The Golden State by the end of 2025.

Governor Gavin Newsom has officially signed a bill banning sweepstakes casinos from operating in California. Known as AB 831, the measure calls for California sweepstakes operators to close up by January 1, 2026.

Not surprisingly, the initiative has the full support of California Nations Indian Gaming Association (CNIGA). And with their backing, AB 831 was never going to fail. Tribal influence in The Golden State is stronger than anywhere else, with the exception of perhaps Oklahoma.

Members of CNIGA currently have exclusivity over what limited gambling or betting-adjacent activities are permitted. There are currently 76 casinos and five mini casinos located throughout the state. All of them are tribal operated.

Are California Sweepstakes Casinos Actually Any Different from Gambling?

Opponents of California sweepstakes betting have long argued these online gambling sites infringe upon the exclusivity granted to tribal nations. In doing so, they violate The Golden State’s constitution.

California sweepstakes operators maintain that their business model exists under an Alternative Method of Entry (AMOE).

This argument is similar to prediction-market operators saying they don’t actually provide online sports betting in the United States because their transactions are trades, and thus subject to federal regulation rather than state oversight. In the case of sweepstakes casinos, they believe “sweepstake” transactions fall under an entirely separate umbrella compared to gambling. The distinction between the two is hazy, but Jack Andrews lays it out for Unabated.com:

“You sign up for a site and quickly notice there are two different sections. The betting lines are the same on both sections. Both sections also use a virtual currency for the betting. On one side you wager virtual coins and on the other side you wager virtual cash. The difference is on the virtual coin side of the house, your virtual coins are always going to be worth nothing. You can bet 1000 virtual coins to win 10,000 virtual coins, but if you win, your virtual coins are still worth $0.

“However, on the virtual cash side of the house, your virtual cash can be converted into real money when you withdraw. So a wager of virtual cash is like wagering real money. You’ll find these sites allow you to purchase a boatload of virtual coins and then give you a 1-to-1 equivalent of virtual cash as a bonus in that same transaction.”

If this sounds needlessly complicated, that’s because it’s supposed to be needlessly complicated. So much of the argument in favor of California sweepstakes boils down “You’re not wagering actual cash, you are wagering virtual cash that you used actual cash to pay for.”

Sweepstakes Casinos are Not Happy with Newsom’s Decision

As Matthew Waters of Legal Sports Report breaks down, California sweepstakes operators are not happy with the latest development:

The Social Gaming Leadership Alliance asked Newsom to veto the bill. It noted a study done for it by Seven Letter Insight that said 85 percent of respondents wanted California to ‘modernize and update’ laws to regulate and tax sweepstakes operators for more tax dollars.

‘It is incredibly disappointing that the California Assembly decided to pass AB 831,’ said Jeff Duncan, Executive Director of SGLA. “Beyond the fact that this bill would worsen economic disparities among California tribes, put California to the back of the line in terms of digital innovation in this space, and take away a popular form of entertainment for residents, it will immediately strip $1 billion out of the state’s economy. We implore Governor Newsom to veto this bill and instead open the door for online social games to support economically disadvantaged tribal nations and the state’s economy while positioning California as a leader in next-generation gaming technology.”

Sweepstakes operators are indeed having a tough go of things in bigger markets. New York has officially banned the casinos from the region. Add in the California sweepstakes ban, and you have two of the country’s three largest markets now off limits.

Many expected The Sunshine State to follow suit, given the rigid laws in place for sports betting in Florida. As it turns out, though, a bill banning sweepstakes casinos failed to pass.

Sweepstakes Ban Sends a Clear Message About the Future of California Sports Betting

The fate of sports betting in California is not tied to the state’s views on sweepstakes casinos. However, it does send a clear message that any California sports betting legislation will need to be driven by tribal nations and afford the CNIGA the same exclusivity they have on the casino industry.

This is actually a pretty big reveal, when you think about it. The last attempt at California sports betting legalization failed because of counter-campaigning from both tribes and online sportsbooks in the United States. Since that 2022 flop, the relationship between tribes and corporate sportsbooks has seemingly improved. But if the state is unwilling to show leeway to California sweepstakes casinos, it doesn’t bode well for online sportsbooks looking to eventually crack the market.

Time will tell where The Golden State lands on sports betting in the near future. It is bound to come up during the next round of legislative meetings in 2026. Especially when there has been no material movement on the subject since the 2022 failure.

Whether this eventual dialogue goes anywhere is a separate matter. For now, though, we can be sure any sports betting initiative will need to align with the message sent by the California sweepstakes ban.

Take a look at this list of the top online sportsbooks so you can find one that works for all of your sports betting needs: