The Social Gaming Leadership Alliance (SGLA) is warning California lawmakers and residents that Assembly Bill 831 would not only “close off a potential revenue stream for the state, but it would also expose a wide range of legitimate businesses to unprecedented criminal liability,” the SGLA stated in a news release.
California Assembly Bill 831 Would Ban Sweepstakes Casinos, Promotions
AB 831 would outlaw online sweepstakes casinos and sweepstakes promotions by companies such as Marriott, Microsoft, and Starbucks. Lawmakers advanced the bill beyond the Senate Governmental Organization committee last week. The measure calls for increased penalties for violators of up to a $25,000 fine and a year in jail.
Other opponents of AB 831 include the American Civil Liberties Union (ACLU) and the Association of National Advertisers, whose members include Google, NBCUniversal, and other Fortune 500 companies, along with the Social and Promotional Games Association (SPGA) and the American Transaction Processors Coalition.
“One of the most concerning aspects of AB 831 is its overly broad language, which could criminalize routine services provided by technology companies, financial institutions and media platforms,” said a spokesperson for the SGLA.
“The California Senate Public Safety Committee’s own report into the bill warns that the overly broad provisions risk turning everyday business operations – such as payment processing, marketing services, advertising and platform hosting – into criminal offenses.”
The criminal code language in subsection (b) of AB 831 states: “It is unlawful for any person, entity, financial institution, payment processor, geolocation provider, gaming content supplier, platform provider, or media affiliate to support directly or indirectly the operation, conduct, or promotion of an online sweepstakes game within this state.”
SGLA States Red Flags Of AB 831
According to the SGLA, the sweeping language in AB 831 is flawed for three reasons:
Impractical Monitoring Requirements. Service providers would be forced to act as de facto law enforcement, monitoring clients’ promotional activities – an unrealistic and burdensome expectation.
Unfair Criminal Liability. Businesses could face fines up to $25,000 and up to one year in jail – even if they had no knowledge of or control over a client’s activities.
Lack of Clear Standards. The bill fails to define key terms, offer safe harbor provisions, or establish reasonable compliance expectations, leaving businesses vulnerable to arbitrary enforcement.
“This rushed proposal not only cuts Californians off from the free-to-play games they enjoy and a potential revenue stream for the state, but it also threatens to criminalize the businesses that drive California’s economy,” said Social Gaming Leadership Alliance (SGLA) Executive Director and former Congressman Jeff Duncan.
“We urge California lawmakers to take California businesses out of the crosshairs by making AB831 a two-year bill, allowing for a more thoughtful, consultative and collaborative process.”
Dual-Currency Model Would Be Outlawed
Per the Legislative Counsel’s Digest, California’s existing law “prohibits specified unfair acts or practices undertaken or committed by any person in the operation of any contest or sweepstakes.”
This includes “using or offering for use any method intended to be used by a person interacting with an electronic video monitor to simulate gambling or play gambling-themed games in a business establishment that directly or indirectly implements the predetermination of sweepstakes cash, cash-equivalent prizes, or other prizes of value.”
AB 831 would specify that “using or offering for use any method, including an internet website or an online application, in the manner described above is prohibited, and would make conforming changes.”
In addition, the measure would make “an unfair practice using or offering games of these types that use a system of payment” that allows the person “playing the simulated gambling program to become eligible for a prize or award, cash or cash equivalents, or a chance to win a prize or award, or cash or cash equivalents, in a business establishment, on the internet, or using an online application” unlawful.
This means social casinos would also be impacted because of their dual-currency system.
Bill Puts Rewards Apps, Marketing Campaigns At Legal Risk
The measure would essentially stifle innovation and hurt the digital entertainment industry, putting all types of promotions, rewards apps, and marketing campaigns at legal risk.
“A blanket prohibition on online sweepstakes would have far-reaching and unintended consequences – stifling innovation, undermining lawful business models, and reducing customer access,” wrote H. West Richards, Executive Director of the American Transaction Processors Coalition (ATPC) in a letter opposing Assembly Bill 831 that was submitted to a Senate committee.
Richards continued, “A more balanced regulatory approach would allow responsible operators to function under clear rules, protecting consumers while preserving market integrity.”
The SGLA said it remains committed to “working with California lawmakers, regulators, and stakeholders to craft policies that protect consumers, preserve player choice, and support innovation, without placing undue legal risk on legitimate businesses.”