California Bill To Ban Unregulated Sweepstakes Could Move Fast

California’s anti-sweepstakes bill could get through the legislature by the end of this session, California Nations Indian Gaming Association (CNIGA) Chair James Siva said Wednesday. Speaking on a New Normal webcast titled “Disrupt and Dismantle — California’s Strategy to Shut Down Sweepstakes Casinos Confirmation,” Siva also said that he expects legal challenges once AB 831 does become law.

The bill, which June 13 was put in the “inactive file,” started as a tribal bill that would extend the amount of time for a state-tribal compact to be approved. But Monday, the Senate stripped the original text and replaced it with language that would prohibit sweepstakes in the state.

AB 831 is already on third reading in the Senate. It would have to go back to the House for approval of the changes.

California’s regular session runs until Sept. 12. The crossover deadline was June 6, which is why the Senate — with the backing of Indian Country — opted to strip a House bill that had already been sent over.

Key language is ‘dual-currency’

AB831 strengthens an existing California sweepstakes law by explicitly banning online sweepstakes games defined as gambling, specifically those using a “dual-currency” system. The bill is in response to the rise of unregulated sweepstakes platforms across the U.S.

States from Pennsylvania to Louisiana have sent out cease-and-desist letters in recent months to stop unregulated sites from operating. So far, California regulators have not sent out letters, though a legislative fix would be more complete.

California’s tribes have been inundated with issues to deal with this year. They are currently in the midst of a lawsuit with the state’s card rooms, are trying to craft language for a legal sports betting ballot initiative (likely for 2028 or 2030), and are educating on and discussing how to fight back against prediction markets and unregulated sweepstakes platforms.

Getting the state’s 100-plus tribes on the same page for the sweepstakes bill was “very easy,” Siva said. “But I think it’s because of the timing of when it came up. I think that with sports betting, CFTC (the Commodity Futures Trading Commission, which regulates prediction markets) … this bill came at the right time where the tribes are engaged and it was really quite easy to pull tribal support on this bill. I have not heard any pushback.”

Siva said CNIGA is at the “nexis” of all these events. The group has held multiple meetings to address all the issues in recent months. And the sheer volume of issues that tribes are currently facing in an effort to maintain exclusivity and sovereignty has galvanized Indian Country.

Tribes already have on-reservation exclusivity

A key consideration in the fight against sweepstakes, in particular, is that under the Indian Gaming Regulatory Act (IGRA), tribes have total exclusivity over gambling on their reservations. In some states, like California, Florida, or Washington, Indian Country in agreement with their states has exclusivity to gaming anywhere within state borders.

Given the digital nature of unregulated sweepstakes and federally regulated prediction markets, those platforms are currently offered on reservations all over the U.S. But Vice President, Associate General Counsel, Yuhaaviatam of San Manuel Nation Michael Hoenig said tribes have the exclusive right to govern what happens on their land, and there are also federal options to fight back.

“Tribes should have every right to say that you cannot offer this on our lands,” he said. The “NIGC (National Indian Gaming Commission) could offer a letter of concern and eventually issue a violation. There are a lot of levers.”

Hoenig also suggested that the sweepstakes platforms may violate the Wire Act or the Unlawful Internet Gambling Enforcement Act (UIGEA), and that tribal gambling regulators can push back with fines and enforcement on their lands.

Jason Giles, executive director of the Indian Gaming Association, pointed to California as a key player in the national fight against unregulated gambling platforms.

“California is going to have stand tall and tough against this, and tribes are an easy mark,” he said. “They’ll never understand or care to understand why a tribe has exclusivity in a state. On the reservation, we always had exclusivity, and it was the Supreme Court that upheld that and said do whatever the hell you want to do on your land.”

Host Victor Rocha was more succinct: “If a tribe has $1 million, there will be a million people wanting it.”

History never very distant

Thought not explicitly stated, Giles and Rocha were alluding to the history of Native Americans in the U.S. Though long ago from a time perspective, the history and memories of being removed from their lands by white settlers — whether colonists or Spanish missionaries — are never far below the surface of a discussion about Indian gaming.

As a country, the U.S. took much away from the natives, and giving them exclusivity to gambling — albeit somewhat limited — has been a game changer that tribes continue to defend.

Panelists clarified that AB831 is intended to eliminate a specific kind of sweepstakes games — ones that are considered gambling. That word is defined by as a game that includes consideration (betting something of value), risk, and a reward (of value).

In a statement after news of the bill broke, the Social and Promotional Games Association and Social Gaming Leadership Alliance released statements suggesting that retail sweepstakes at businesses like McDonald’s could be caught in the bill’s net and that lawmakers crafted the bill in secret and without their input.

But Hoenig said the difference is that there is no money involved with the McDonald’s Monopoly game or promotions from other retail stores. The San Manuel Band of Mission Indians does offer its own “online social gaming” site under the tribe’s Yaamava gambling brand. But Hoenig said that also does not involve consideration.

New Normal host Rocha has been beating the drum about the rise of sweepstakes since last fall. Since then, he said, when unregulated sweepstakes operators “see a law, they run, so they are going to run out of California.

“They are just on a bad losing streak. They’re in trouble, and they know it. They say California is the land of milk and honey for them, but once they are out of California, they’re done.”