The $1 billion choke point: California bans sweepstakes casinos

The signing of Assembly Bill 831 (AB 831) marks a watershed moment. California represents an estimated 20% of the entire US sweepstakes casino revenue, meaning the ban alone could wipe out around $1 billion in annual economic activity for the industry.

While states like New Jersey, Montana, and Connecticut have already enacted similar prohibitions, California has become the most populous state to outlaw sweepstakes casinos.

This raises the question: Does the sweepstakes casino model have the resilience and financial fortitude to survive this monumental setback?

Closing the loophole

The political will to end the grey market was undeniable, culminating in a near-unanimous legislative vote that sent a powerful message to operators nationwide.

Lawmakers specifically designed AB 831 to address platforms that have long operated in a legal "gray zone," allowing them to skirt licensed gaming regulations. The core motivation was to "close this loophole," ensuring that unlicensed platforms could no longer thrive under the guise of sweepstakes or social play.

Tribal gaming entities, the bill's primary sponsors, argued successfully that these sites were "exploiting a technicality" and dangerously encroaching on their exclusive, voter-approved gaming rights. For supporters, the law is simply about restoring integrity to California’s heavily regulated gaming environment and ensuring fair competition.

AB 831 key facts	Detail
Status	Signed into law (Governor Newsom)
Effective date	January 1, 2026
Legislative approval	Unanimous (Senate 36-0, Assembly 63-0)

Battle lines

The legislation drew a clear line between the state’s regulated tribal gaming interests and the unregulated online sector.

The bill was fiercely supported by powerful tribal nations, including the California Nations Indian Gaming Association (CNIGA), which championed the measure as necessary to restore integrity and defend their exclusive gaming rights.

On the opposing side was the Social Gaming Leadership Alliance (SGLA), the trade group for sweepstakes operators, which lobbied for a veto. SGLA argued the prohibition was short-sighted, claiming the ban would immediately strip over $1 billion in annual economic activity from the state.

The sheer consensus on the ban was staggering, as one industry expert (Shawn Fluharty) noted;

“[Sweepstakes] couldn’t get one vote in California. You know how hard that is? They can’t agree on the colour of the carpet.”

What this means for the industry

AB 831 criminalizes not only the operators but all entities that “knowingly and willfully support” the platforms. This crucial clause targets the industry’s Achilles’ heel, its suppliers:

• Financial institutions and Payment Processors

• Gaming Content Suppliers (the true 'choke point')

• Geolocation Providers

• Media Affiliates

Representing 20% of the US market, this financial hit is enormous, leading analysts to forecast significant revenue declines in 2026. By cutting off the supply chain, from games to payments, California has deployed the primary weapon against the model's survival. This strategy to alienate and prosecute suppliers is clearly designed to properly destroy the sweepstakes model, marking a model-altering setback for the entire sector.

What does it mean for Californian players

For the millions of Californian players, the ban means a forced and sudden exit. 

While the amended law explicitly protects casual players from liability, they face the immediate problem of their accounts.

Following the pattern set in other states, players should expect operators to announce a short redemption window (often 2-4 weeks) to redeem Sweeps Coins for cash prizes. However, Gold Coin balances, having no monetary value, are typically lost.

The national outlook

More importantly, this decisive action in the nation's most populous state signals the final turning point for the US sweepstakes model. California is the 17th state to take action against the grey market, and its monumental financial and legislative impact is expected to accelerate similar efforts in states where legislation is still pending, such as New York and Florida.

A blueprint for dismantling the sweepstakes casino model

The era of exploiting technical loopholes to offer unlicensed casino gaming appears to be rapidly closing, as lawmakers across the country now have a clear, enforceable blueprint to effectively dismantle this business model.