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California sweepstakes casinos face ban under AB 831 bill – what you need to know

California sweepstakes casinos face ban under AB 831 bill - what you need to know. Illustration of a sweepstakes ticket overlaid on a cityscape with palm trees and tall buildings in the background, suggesting a focus on sweepstakes or gaming in Los Angeles.

All eyes are on California this week as its controversial anti-sweepstakes bill heads into a second legislative hearing on Tuesday (July 15) before the Senate Public Safety Committee. Known as AB 831, the bill would ban online sweepstakes casinos and slap criminal penalties on operators, suppliers, promoters and even media affiliates.

The proposal has sparked a heated debate with groups like the Social and Promotional Games Association (SPGA) arguing it could stifle “innovation,” while some tribal leaders worry it could harm communities that have already faced historic challenges.

California is still one of 10 states that haven’t legalized sports betting. At the same time, daily fantasy sports have been running online in the state for over a decade. Sweepstakes casinos, however, have become a headache for regulators across the country. While tax concerns are part of the issue, the bigger challenge is how difficult these platforms are to regulate.

In June, AB 831 was rewritten from the ground up by Assembly member Avelino Valencia with support from the California Nations Indian Gaming Association. The updated version is designed to close every loophole and remove sweepstakes casinos from the state completely.

Here’s what you need to know about AB 831 and how it could impact sweepstakes casinos in California.

Is sweepstakes legal in California?

Yes, sweepstakes are generally legal in California as long as they follow certain rules. Entry must be free and based purely on chance, with no purchase or payment required to enter or claim a prize. The state also has strict transparency and consumer protection requirements. Companies have to clearly disclose the rules, who’s eligible, and the odds of winning.

But California Attorney General Rob Bonta isn’t a fan of how some platforms have been operating. He recently released a scathing opinion about them, saying these types of games have often been used to scam consumers.

In a 33-page document published earlier this month, Bonta criticized draft and pick ’em-style daily fantasy contests. He argued they cross a line “because they involve betting on sporting events.”

On the State of California Department of Justice website, Bonta had already warned: “Thousands of companies use sweepstakes cards, letters, and calls—or the promise that you have won a prize—to entice consumers to send money, give up their personal information, or listen to a persuasive sales pitch. Often, consumers give the company their personal information, time, or money, only to get nothing back at all.”

DraftKings and Underdog are among the companies pushing back. Underdog has said it will keep offering fantasy sports in California and even tried to block Bonta’s opinion from being released. That effort didn’t work and a California state judge ruled the opinion doesn’t change existing state law and allowed it to be published.

Jeff Duncan, the Social Gaming Leadership Alliance (SGLA)’s executive director and former Congressman, stated: “This bill isn’t about protecting players. It is about protecting incumbents from competition.”

The SGLA has now launched a dedicated website. So far, the site shows 21,577 actions taken, including writing, calling, and posting to X, formerly known as Twitter, all aimed at local lawmakers.

On his webcast “New Normal,” Victor Rocha, conference chair of the Indian Gaming Association, said it’s “only a matter of time before the controversial dual currency form of gaming is eradicated.”

How do I find legitimate sweepstakes?

Bonta has some advice for spotting legitimate sweepstakes and avoiding scams.

For one, don’t pay to enter a sweepstakes or for the chance to win a prize. Real sweepstakes are free and based on chance. It’s illegal for companies to make you buy something, pay a fee, or do anything to increase your odds of winning. They must give you a way to enter without spending money, though that information is sometimes buried in the fine print.

Also, never pay to claim a prize. If you get a surprise notice saying you’ve won, be cautious. Legitimate prizes don’t require you to cover “taxes,” shipping fees, or any other charges.

Avoid calling 1-900 or 900 numbers to enter sweepstakes or collect prizes. These “pay-per-call” numbers can rack up huge charges and are a common trap.

“Don’t pay to enter a sweepstakes or for the chance to win a prize. Legitimate sweepstakes are free and by chance. It is illegal to require you to buy something or pay to enter or increase your odds of winning a sweepstakes.” – Attorney General Rob Bonta, State of California Department of Justice

Be careful if you’re asked to call a number, attend a webinar, or join an event to learn more about a sweepstakes or prizes as this is often a tactic to get you to listen to a sales pitch for an overpriced product, a trial offer, or even a donation.

Don’t hand over your personal information like your phone number, home address, or email. Entering a shady sweepstakes could result in a flood of telemarketing calls, junk mail, and spam because your details might be sold to other companies.

Watch out for impressive-sounding names, official-sounding titles, and prizes that seem too good to be true. Scammers often rely on these tricks to appear credible and lure people into handing over their money or information.

It’s also worth knowing the rules about raffles. If you’re paying for a chance to win, that’s a raffle, not a sweepstakes. In California, raffles are only legal if run by a charitable organization registered with the Attorney General’s Office, and at least 90 percent of the money raised must go to charity. You can check if a raffle is registered by searching the Attorney General’s Registry of Charities and Fundraisers.

If you think you’ve come across a scam, you can report it directly to the California Attorney General’s Office.

What states require sweepstakes registration?

In the United States, only Florida, New York, and Rhode Island require sweepstakes registration under certain conditions. In Florida and New York, this applies if the total retail value of all prizes is more than $5,000. Whilst in Rhode Island, the threshold is $500, but it only applies to retail store promotions. In some cases, bonding is also required.

In every other state, sweepstakes and contests follow general promotion laws without any extra state-specific requirements.

Similar to California, many states make it clear that winners cannot be asked to pay or buy something in order to claim their prize. For promotions tied to alcoholic beverages, there are also rules in place.

In states like Alabama, Arizona, Indiana, and Vermont, sweepstakes cannot require people to visit a licensed location to enter, and all such promotions must be open to residents across the entire state.

As for tobacco-related promotions, these are completely banned in Massachusetts, Michigan, and Virginia.

Featured image: Canva

The post California sweepstakes casinos face ban under AB 831 bill – what you need to know appeared first on ReadWrite.

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