California has become the latest state to crack down on sweepstakes casinos with new legislation introduced last week. The measure is backed by the California Nations Indian Gaming Association (CNIGA).
California Bill Mirrors New York’s Anti-Sweepstakes Measure
Howard Glaser, Global Head of Government Affairs at Light & Wonder, reported the news on LinkedIn, posting:
“A bill introduced today with the backing of the California Nations Indian Gaming Association follows similar lines as the New York legislation passed unanimously this week, making it unlawful to facilitate or promote the operation of illegal online sweepstakes casinos by any ‘person, entity, financial institution, payment processor, geolocation provider, gaming content supplier, platform provider, or media affiliate.'”
Several reports suggest that language targeting sweepstakes casinos will be included in an amendment to bill AB831, which proposes changes to tribal gaming compacts.
Earlier this month, members of the New York Senate passed Sen. Joseph Addabbo’s Senate Bill 5935 by a 57-2 margin with four abstentions, and the measure now awaits Gov. Kathy Hochul’s signature.
SB 5935 amends the racing, pari-mutuel wagering and breeding law, in relation to “prohibiting online sweepstakes games and revenue from illegal markets.” The bill lists stricter penalties and enforcement provisions as well.
Addabbo’s bill calls for fines of $10,000 to $100,000 per violation along with the loss of a gaming license.
Measure Would Extend The Reach To Online Sweepstakes Casinos
Tribal leaders are reportedly pushing for the legislation in California.
Victor Rocha, the Conference Chair of the Indian Gaming Association (IGA), previously released a statement on sweepstakes casinos, strongly opposing the free-to-play online gaming platforms:
“They’re unregulated. They’re untaxed. This is gambling on training wheels. It’s a bunch of lawyers who are spitting in our face and looking at gray areas thinking that we’re not going to act. … These guys don’t pay money into the system. When we’re talking about cannibalization, this is what we’re talking about. It’s companies like this that take money out of California.”
Sports betting and gaming lawyer Daniel Wallach pointed out on X that: “California already has a statutory ban on land-based sweepstakes gambling businesses.
“This bill would extend the reach of that statute to online sweepstakes casinos, although those businesses are likely already illegal under well-settled CA case law.”
California Bill Sponsor Operates A Social Casino
According to internal communications from the CNIGA, the bill was sponsored by San Manuel Entertainment Authority (SMEA), the same group that operates Yaamava’ Resort & Casino.
SMEA also runs a social casino — PlayOnline — that offers sweepstakes promotions. Their promotions page lists “The Factory Sweepstakes” as the first item.
On their “Fall Surprizes Sweepstakes” page, players are also able to win thousands in real-money casino credits.
Bill Could Target Drake And Other Celebrity Promoters
Glaser went on to state: “The language of the bill suggests that California celebrities pushing sweeps casinos – such as Drake, Paris Hilton and Ryan Seacrest – would be subject to liability for their roles in illegal casino advertising and promotion.”
In 2022, Drake first partnered with Stake, one of the leading social casinos. Reports from the Financial Times indicated he was earning up to $100 million annually from the partnership.
Stake.us, the U.S. brand for online crypto-gambling platform Stake.com, is already facing a lawsuit in California over claims its sweeps model is in violation of gambling laws.
Stake.us’s “no purchase necessary” business model for sweepstakes gaming was cited in the case. The complaint, filed by plaintiff Dennis Boyle, claims the site’s “Gold Coins” and “Stake Cash” system is real-money gambling.
Judge James Selna did not make a ruling on Stake’s legal status, requiring the dispute to be resolved through private arbitration with the American Arbitration Association (AAA).
Ryan Seacrest Faces Legal Action For Promoting Chumba Casino
In addition, Ryan Seacrest has a deal with VGW-operated Chumba Casino, but the Wheel of Fortune and American Idol host is also facing legal action for his social media promotions of the platform.
In the lawsuit, California resident Aubrey Carillo claims Seacrest is promoting illegal gambling by posting paid advertisements for Chumba on social media and by appearing in promotional materials on the website.
The suit, filed in the Superior Court of the State of California for the County of Riverside, seeks an injunction to shut down the sweeps website in the Golden State and to prevent Seacrest from profiting from the casino.
Carillo also alleges that Seacrest is contributing to online gambling addiction among adults and adolescents. She said at least one child in her family accessed the website.
The suit claims, “Seacrest has a reported net worth of $450M and has had estates or penthouses in Beverly Hills, Napa Valley, Bel-Air & Manhattan. Someone this blessed in life does not need to hurt people for more money, but Seacrest does just that by serving as the official celebrity endorser.”