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California Governor Newsom signs bill banning sweepstakes casinos, effective 2026, expected to impact $4 billion industry.

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California Governor Gavin Newsom signed Assembly Bill No. 831, prohibiting the operation of sweepstakes casino platforms in the state, which will officially take effect on January 1, 2026. This move makes California the fourth state to implement a ban on unregulated sweepstakes platforms, following Connecticut, Montana, and New Jersey, and is seen by analysts as a major blow to the US sweepstakes industry valued at $4 billion. The bill was unanimously passed by the California legislature, prohibiting the provision of dual-currency sweepstakes casino services, which are said to mimic online casinos and sports betting products. Industry analysts predict that the ban will lead to a loss of about 20% of the revenue in the US sweepstakes industry, and Eilers & Krejcik Gaming has revised its 2025 US sweepstakes casino revenue forecast from $4.7 billion to $4 billion.

Bill Signing and Effective Date

California Governor Gavin Newsom signed Assembly Bill No. 831 last Saturday, prohibiting the operation of sweepstakes casino platforms in the state. The signing occurred just one day before the final deadline for the governor's action, highlighting the government's emphasis on this issue.

The bill will officially take effect on January 1, 2026, providing the industry with a window for adjustment and transition. The bill mainly targets dual-currency sweepstakes casino platforms, which are said to mimic online casinos and sports betting products.

Industry Impact and Revenue Forecast

According to analysts at the Global Gaming Expo in Las Vegas, the California ban will lead to a loss of about 20% of revenue in the US sweepstakes industry. This forecast is based on California's market position and consumer capacity as the largest state in the US.

Eilers & Krejcik Gaming has revised its forecast for US sweepstakes casino revenue in 2025, reducing it from $4.7 billion to $4 billion. The company also predicts a further 10% decline in revenue in 2026, reflecting the ongoing impact of the ban.

Legislative Background and State Trends

California has become the fourth state in the US to implement a ban on sweepstakes casinos, following similar actions by Connecticut, Montana, and New Jersey. This trend indicates that US states are strengthening their regulatory efforts on sweepstakes platforms.

Legislators in New York and Louisiana have also passed bills prohibiting sweepstakes platforms, showing a nationwide tightening of regulations on these platforms.

Legal Litigation and Enforcement Actions

Prior to legislative action, the Los Angeles City Attorney's Office, led by Heidi Feldstein Soto, filed a lawsuit in August against sweepstakes operator Stake.us, accusing it of being an illegal gambling site. The lawsuit claims that the platform, under the guise of an "American social casino," actually provides real money gambling services.

The lawsuit also involves Stake's suppliers and streaming service Kick, many of which exited the market shortly after the lawsuit was filed, showing the direct impact of enforcement actions on the industry ecosystem.

Industry Reaction and Expert Opinions

West Virginia Representative Sean Fluharty stated that the unanimous vote by the California legislature was a strong blow to the sweepstakes industry. He noted, "In California, where they can't even agree on the color of the carpet, the fact that sweepstakes activities didn't get a single vote speaks volumes."

Trey York, Vice President of Government Relations at the American Gaming Association, said, "This entire business model is essentially a too-clever attempt to provide the public with an entry into online casinos. This so-called sweepstakes model is completely different from traditional sweepstakes."

Regulatory Agency Actions and Cease Orders

Gaming regulatory agencies across the US have issued over 100 cease orders to sweepstakes operators, showing a national trend of tightening regulations. Louisiana and New York are among the states taking proactive actions, although their legislative paths differ.

Louisiana Governor Jeff Landry vetoed a bill prohibiting sweepstakes platforms, but the state's Gaming Control Board subsequently issued cease orders to 40 unregulated gambling websites, including several sweepstakes sites.

New York State Regulatory Dynamics

New York Governor Kathy Hochul has not yet acted on Bill S5935, but State Attorney General Letitia James issued 26 cease orders to sweepstakes operators in June. Brian O'Dwyer, Chairman of the New York Gaming Commission, supports this action.

O'Dwyer stated, "These so-called 'sweepstakes' games are reckless, unsafe, and illegal. I have always strongly advocated for a crackdown on such activities to eradicate the illegal gambling market."

Business Model and Regulatory Loopholes

Sweepstakes casinos are accused of exploiting regulatory loopholes to offer gambling products, using a non-monetary "gold coin" and redeemable real money "sweepstakes coin" system to circumvent gambling regulations. This model has been closely monitored by legislators and regulatory agencies over the past year.

Regulatory agencies consider these platforms to essentially provide gambling services, but they circumvent existing gambling laws and regulations through technical design, necessitating new legal measures for regulation.

Market Adjustments and Industry Future

As state regulations strengthen, the sweepstakes industry faces significant adjustments. Analysts predict a continued decline in industry revenue, and operators need to adjust their business models or exit the market. The California ban is particularly significant, as its market size and influence may drive other states to take similar actions.

Industry experts at the G2E panel discussion believe that suppliers are the "real bottleneck" in shutting down sweepstakes casinos, indicating that cooperation in the supply chain is crucial for enforcement effectiveness.

Social Impact and Responsibility Considerations

Proponents of the ban emphasize the social harm of sweepstakes casinos, arguing that these platforms foster gambling addiction behaviors with devastating consequences. The Los Angeles City Attorney pointed out in the lawsuit that these platforms "bring devastating consequences to players."

Opponents argue that excessive regulation may push the market underground, increasing consumer risks, and a balance needs to be found between regulation and consumer protection.

#iGaming#政策分析#产业AIEilersKrejcikGamingAICaliforniaAIRevenueForecastAIRegulatoryActionsAISweepstakesCasinosAIGavinNewsomAILegislation

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