Sweeps Ban Bill Reaches Full California Senate Floor, Still Several Steps From Passage

The fate of California Bill AB 831 was anything but held “in suspense” Friday when the Senate Appropriations Committee unanimously moved it forward to the full upper chamber of legislature.

The bill, which would ban online sweepstakes casinos in the Golden State, was placed in suspense earlier last week by the committee for further review. AB 831 was one of a slew of bills moved forward by Appropriations prior to the holiday weekend, doing so by a 7-0 vote.

Appropriations became the third Senate committee to vote through AB 831, which has taken a long and winding road through state government because Assemblyperson Antonio Valencia’s bill is a “gut and amend” of a previously written bill. It passed through the Government Organizational Committee and Public Safety Committee in July. Should it pass the full Senate, the bill would then return to the Assembly for debate.

Will mounting opposition force debate?

The bill has gained more opponents in recent weeks as a split has emerged among tribes. The Yuhaaviatam of San Manuel Nation tribe has been a long-standing proponent of the bill, offering testimony in support during both the Government Organizational and Public Safety committees.

The Sherwood Valley Band of Pomo Indians tribe is among three who have submitted testimony opposing AB 831, and they were joined last week by potential future sweeps operator Publishers Clearing House (PCH). PCH called for sweeps to be regulated, claiming that could generate up to $149 million in annual tax revenue for California.

The sweepstakes casino industry’s two major lobbyists have long opposed the bill, with the Social Gaming Leadership Alliance (SGLA) releasing a statement after Appropriations passed the bill:

“SGLA is extremely disappointed that the Senate Appropriations Committee has decided to move AB831 forward instead of listening to the California tribal nations that oppose the bill, the legitimate California businesses that will be threatened with criminal liability for providing routine services, the California constituents who have made it clear they prefer commonsense regulation over banning online social games, and the California players who love the games,” said SGLA Executive Director Jeff Duncan.

“We urge lawmakers who are planning to vote in favor of AB831 to reconsider their stance and think about what their constituents actually want.”

The SGLA also released results of a poll, which has an oversampling of California residents per the release, that states 85% of respondents agreed to the statement “We should modernize our laws to regulate and tax online social gaming to provide more money for state budgets.”

LA city attorney raises the stakes

As state legislators debate AB 831, Los Angeles City Attorney Hydee Feldstein Soto filed a civil enforcement lawsuit in California Superior Court on Friday against Stake.com and several of its suppliers, claiming the defendants are:

“running and/or aiding and abetting the running of an illegal online gambling enterprise in violation of the Unfair Competition Law (‘UCL’), California Business and Professions Code sections 17200, et seq., and for making false and misleading statements in furtherance of that enterprise in violation of the UCL and the False Advertising Law (‘FAL’), California Business and Professions Code sections 17500, et seq.”

The lawsuit alleges Stake.com was “marketed to U.S. customers as a ‘social casino’ that does not permit ‘real money gambling.'” It called that “a ruse” and claims “Stake.us has deceptively portrayed itself to regulators and consumers as offering harmless gameplay when, in fact, it was and is an illegal online casino. Stake.us offers games that are designed to look and feel like traditional casino games in a traditional casino.”

The 64-page filing includes multiple images of Stake’s online offerings, which showed roulette and slots as examples. The filing claims Stake offers two types of currency, “gold coins,” which have no real money value, and “Stake cash,” which the lawsuit notes “can be redeemed for cryptocurrency or digital gift cards on a 1 SC to $1 basis.”

The naming of suppliers and vendors in the lawsuit by Soto, who also retained the legal services of Susman Godfrey — which has previously litigated class-action lawsuits against sweepstakes casinos in other states — is a new wrinkle. It appears to have created a ripple effect below the operator level as Next.io has reported suppliers Evolution and Pragmatic Play have left the California market.