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In a decisive 63-0 vote, members of the California Assembly unanimously approved a bill that would ban sweepstakes casinos in the state.
The bill now heads to Gov. Gavin Newsom‘s desk, where he is likely to sign it based on his past stances on gaming expansion and his relationship with federally recognized tribes.
Why Gov. Newsom is expected to sign CA’s sweepstakes casino ban
The only thing stopping California’s sweepstakes ban bill (AB 831) is Newsom, who can sign or veto it. The governor’s history with tribes in California suggests the former, as he has taken several steps to show the state’s support. That includes issuing a formal apology to Native communities on behalf of the state and announcing the return of nearly 3,000 acres of land to the Shasta Indian Nation.
In addition, according to a story by Cal Matters, Newsom signed a law in September allowing tribes to sue card rooms offering games such as blackjack, which are only permitted only at tribal casinos.
What does California’s ban mean for US sweepstakes casinos?
On its own, a California ban would deal a blow to the sweepstakes casino industry, though likely one it could recover from. However, the measure comes amid several years of states pushing back on the platforms.
Other states join California in pushing out sweepstakes casinos
New Jersey enacted a ban on sweeps casinos this past month, dealing the industry a major setback given the Garden State is one of the top gaming markets in the country.
The action came about two months after New York Attorney General Letitia James announced her office had forced sweepstakes casinos out of her state following a series of cease-and-desist letters. In a statement on the removals, James’s office voiced concerns that have been echoed by lawmakers in other states.
“Placing a bet at a sweepstakes casino is risky because sweepstakes casinos are not subject to audits and other regulatory oversight by the state,” her office wrote.
“Without oversight, players have no way of knowing whether a sweepstakes casino’s games are rigged, whether it will be able to cover a winning bet, or whether it complies with the many other consumer protection measures required of legal, licensed casinos.”
Is this the beginning of the end for sweepstakes casinos in America?
It’s difficult to say. Sweepstakes casinos are projected to generate more than $14 billion in gross revenue this year, according to a study by accounting firm KPMG. It’s hard to imagine an industry of that size disappearing entirely in a market as lucrative as the United States.
Still, the industry may find hope in states with smaller tribal gaming markets, where legalizing sweepstakes casinos could provide a significant source of tax revenue for vital programs.
Another potential path forward could be partnerships with regulated real-money online casinos, where sweepstakes operators share revenue in exchange for a foothold in the market and a way to offset casinos’ projected losses.
