Amendments Made To California Anti-Sweeps Bill To Protect Non-Gaming Operations

California State Assemblyperson Antonio Valencia has offered amendments to AB 831, which would ban online sweepstakes casinos in the Golden State.

Valencia’s bill previously passed three Senate committees and was placed on third reading last week after navigating through Appropriations. The new amendments move the bill back to a status of second reading for debate in the full upper chamber.

If the Senate passes AB 831, the bill must return to the full Assembly floor for a vote since it is a “gut-and-amend” of previous legislature filed.

Trying to avoid unintended consequences

A recurring argument presented by online sweepstakes proponents when faced with similar legislation in other states, most notably from the Social and Promotional Gaming Association (SPGA) and the Social Gaming Leadership Alliance (SGLA), is that bills have been written too broadly. Proponents have argued such language would unintentionally impact and harm large commercial companies’ rewards programs.

Valencia addressed the issue directly by inserting an opening section to AB 831. It adds “intent” in the language of the bill for the act to “apply to persons or entities who knowingly and intentionally engage in, promote, or facilitate online sweepstakes games that utilize a dual-currency system.”

It further protects such commercial enterprises by specifying the bill would not apply to “ancillary or publicly available services, platforms or infrastructure providers that may be unknowingly or unintentionally used in connection with those online sweepstakes games provided they are not acting with the intent to further those online sweepstakes games.”

Your online casino is not welcome here

Valencia’s second notable area of amendments are additions to the state’s Business and Professions Code. This covers the gamut of what types of sweepstakes are prohibited in California, and he overhauls Clause 12 of Section 17539.1 to include “any method, including an internet website or application” that would:

“simulate gambling, which, for purposes of this section, includes, but is not limited to, slot machines; video poker; table games, including, but not limited to, blackjack, roulette, craps, and poker; lottery games as defined in Section 319 of the Penal Code; bingo; sports wagering, or any game that mimics or simulates similar gambling.”

Valencia added specific language to include any platform that “utilizes a dual-currency system of payment” to the prohibited list if a platform “allows a person to play or participate in a simulated gambling program for direct or indirect consideration” that offers a chance to win a “prize or award, or cash or cash equivalents.”

The assemblymen added definitions of direct consideration, indirect consideration, and sweepstakes further down in the Business and Professions Code. Valencia defined indirect consideration as something “provided for free through a promotion, bonus, or with the purchase of a related product, service, or activity. As used in this paragraph, ‘related product, service, or activity’ includes a coin, token, or other representation of value that may be used for direct consideration.”

Changes to the penal code

Valencia’s last set of amendments add specifics to the state’s penal code, classifying violations as a misdemeanor punishable with fines ranging from $1,000 to $25,000 and/or a jail sentence of up to one year.

It carries over the definitions of direct and indirect consideration from the Business and Professional Codes, outlaws online games that simulate gambling ranging from slots to sports betting, and makes carveouts to exempt parties defined in Valencia’s Section 1 amendment as well as “lawful games and methods used by a gambling enterprise licensed under the Gambling Control Act or operations of the California State Lottery.”

A fourth tribe opposes AB 831

Even with the newer amendments submitted, a fourth California tribe announced its opposition to the bill. The Mechoopda Indian Tribe of Chico Rancheria submitted a letter to President Pro Tempore Sen. Mike McGuire and the California Senate that the bill “would curtail promising digital commerce avenues that represent critical supplementary income sources for tribes.”

The Mechoopda is the second tribe from the California Nations Indian Gaming Association (CNIGA) to oppose the bill, joining the Sherwood Valley Rancheria of Pomo Indians. A fellow CNIGA member, the Yuhaaviatam of San Manuel Nation, has been a leading proponent of AB 831, offering testimony to the Governmental Organization and Public Safety Senate committees.

“AB 831 is a flawed and rushed bill that lacks broad tribal consensus. As the Mechoopda Indian Tribe of Chico Rancheria highlighted in their opposition, this bill would limit economic options available to tribes and worsen already fragile economic conditions,” said SLGA Executive Director and former U.S. congressman Jeff Duncan. “What lawmakers should focus on instead is creating proper regulation that supports online social games, creates new revenue sources for the state and protects economic opportunities for all tribes.”