Gov. Newsom signs California sweepstakes casinos prohibition
After similar bans on unregulated sweepstakes platforms in Connecticut, Montana and New Jersey, California’s move signals the biggest blow yet to a $4 billion US industry.
Following unanimous approval in the California Legislature, Governor Gavin Newsom this weekend signed a bill banning sweepstakes casinos in the nationâs largest state.
Newsom signed Assembly Bill 831 Saturday, the day before the deadline for him to act. The law prohibits dual-currency sweepstakes casinos, which are platforms that mimic online casinos and sports betting products. It goes into effect 1 January 2026.
According to analysts on a panel last week at the Global Gaming Expo in Las Vegas, the measure will wipe out roughly 20% of the sweepstakes industryâs US revenue.
West Virginia Delegate Shawn Fluharty, president of the National Council of Legislators from Gaming States and head of government affairs at Playân GO, said the unanimous legislative votes in California were a strong mandate against the sweepstakes industry.
â[Sweepstakes] couldnât get one vote in California. You know how hard that is? They canât agree on the colour of the carpet,â Fluharty said on the panel.
The panellists declared the sweepstakes industry essentially defeated after a push that drew lots of attention from gambling companies, regulators and legislators.
âThis entire business model is essentially a too-clever-by-half attempt to offer online casino gateways to the public,â American Gaming Association Vice President of Government Relations Tres York said. âThe so-called sweepstakes model that runs all of the time isnât like any traditional sweepstakes model Iâve ever heard of.â
Other action on sweepstakes in California
Before the legislative action, Los Angeles City Attorney Hydee Feldstein Sotoâs office filed a lawsuit in August against sweepstakes operator Stake.us, arguing it is an illegal gambling site.
âUnder the moniker of âAmericaâs Social Casinoâ and, despite claims that it is just a game, Stake.us is a rogue and real money gambling racket with destructive repercussions for its players,â Feldstein Soto said in a release. âWe are holding Stake.us and its accomplices accountable for violating the law, targeting California for these illegal activities and facilitating addictive gambling behaviours.â
The lawsuit also included Stakeâs suppliers and the streaming service Kick. Many of those suppliers exited the market with Stake shortly after the lawsuit was filed.
The G2E panellists said the suppliers âare the real choke pointâ to shutting down the sweepstakes casinos.
Sweepstakes casinos on their last leg?
Lawmakers and regulators have increased action against sweepstakes casinos in the past year, arguing the platforms exploit loopholes to offer gambling products by offering non-monetary âgold coinsâ and another currency known as âsweeps coinsâ that can be exchanged for real money products.
California joins other states that banned online sweepstakes casinos this year, including Connecticut, Montana and New Jersey.
New York and Louisiana lawmakers also passed bills banning sweepstakes platforms. Louisiana Governor Jeff Landry vetoed the bill, explaining that the regulators already had the power to enforce gaming laws. The Louisiana Gaming Control Board then sent 40 cease-and-desist letters to unregulated gambling sites, including multiple sweepstakes sites.
New York Governor Kathy Hochul has yet to act on S5935, but state Attorney General Letitia James sent 26 cease-and-desist orders to sweepstakes operators in June.
âThese so-called âsweepstakesâ games are unscrupulous, unsecure and unlawful,â New York State Gaming Commission Chairman Brian OâDwyer said in a news release. âI have been very vocal about the need to crack down on these operations, and I am thrilled that Attorney General James has taken this significant step to eradicate the illegal gambling market.â
The letters from Louisiana and New York are just a portion of the more than 100 cease-and-desist letters sent from gambling regulators across the US to sweepstakes operators. Other states to take significant action against the industry include Arizona and Michigan.
After the California bill made its way through the legislature last month, Eilers & Krejcik Gaming revised its 2025 sweepstakes casino US revenue estimate, reducing it from $4.7 billion to $4 billion. It predicts a 10% decline in 2026.
