California Becomes Latest State to Ban Sweepstakes Casinos

^{Governor Gavin Newsom’s signature on AB 831 makes California the largest U.S. state to ban sweepstakes casinos. (Photo: Carrie Schreck / Alamy)}

California Governor Gavin Newsom signed a bill banning sweepstakes casinos from operating in the state on Saturday, dealing a serious blow to one of the online gaming industry’s revenue streams in the US.

Assembly Bill 831 (AB 831), which will go into effect on Jan. 1, 2026, was passed unanimously by both houses of the California legislature before landing on Newsom's desk.

SGLA Blasts Bill as ‘Short-Sighted’

In a state where gaming interests are often fractured, stakeholders throughout California lined up behind AB 831. Supporters included the California Chamber of Commerce, the California Nations Indian Gaming Association, and the Sports Betting Alliance.

On the other hand, the Social Gaming Leadership Alliance (SGLA) and some tribes that desire to work with sweepstakes casino operators – including the Sherwood Valley Rancheria of Pomo Indians, the Kletsel Dehe Wintun Nation, and the Mechoopda Indian Tribe of Chico Rancheria – opposed the legisation.

“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,” Social Gaming Leadership Alliance (SGLA) Executive Director Jeff Duncan said in a statement. “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.”

California’s ban only adds to a growing list of setbacks for the sweepstakes casino model.  Other states, including New Jersey, Connecticut, and Montana, have banned the online sites in 2025. A comparable ban has passed in New York, though Governor Kathy Hochul has yet to sign it into law. 

Sweepstakes Casinos Targeted by AGA, Lawmakers

Sweepstakes casinos have been blasted by the American Gaming Association (AGA) and many regulators, which has long argued that the business model mimics unregulated online casinos. This topic also came up at the recent Global Gaming Expo in Las Vegas.

“This entire business model is essentially a too-clever-by-half attempt to offer online casino gateways to the public,” AGA Vice President of Government Relations Tres York said during a Global Gaming Expo panel. “The so-called sweepstakes model that runs all of the time isn’t like any traditional sweepstakes model I’ve ever heard of.”

Sweepstakes casinos operate on a dual currency model, with one currency (typically called gold coins) being purchasable for social play. The other currency, known as sweeps coins, cannot be directly purchased, but can be redeemed for cash and prizes. 

However, critics have noted that gold coin purchases almost always include sweeps coins, making it akin to a straight deposit transaction for real-money gambling. The AGA released a study earlier this year which found that 90 percent of all sweepstakes casino users considered playing at these sites to be a form of gambling.

With California now joining the growing list of states cracking down on the business model, sweepstakes casino operators will have to evolve or exit the market as the gray area between social play and gambling closes faster and faster.