Following Monday’s Senate Appropriations Committee hearing, the Social Gaming Leadership Alliance (SGLA) urged committee members to reject California Assembly Bill 831, a bill that would outlaw online sweepstakes casinos and promotional games in the Golden State.
SGLA Present Economic Model To California Lawmakers
The SGLA released new economic modeling showing lawmakers that sweeps games currently generate more than $1 billion annually in direct and indirect benefit to California.
The analysis indicates that implementing a “modern regulatory framework” could provide an additional $200-300 million in yearly tax revenue to the state government, according to the SGLA.
If enacted, the SGLA argues that AB 831 would “eliminate $1 billion in annual economic impact to California” and “deprive the state of a promising new revenue stream worth hundreds of millions of dollars annually.”
According to the Senate Appropriations Committee analysis of AB 831, in addition to the bill taking current and potential new revenue out of the California economy, it would impact state government agencies.
AB 831 would incur “potentially significant” costs to the California Department of Justice, the state funded trial court system, and to counties to “enforce and adjudicate.”
Research Findings Conducted By Eilers & Krejcik
Key findings from the analysis, conducted by respected industry research firm Eilers & Krejcik on behalf of SGLA, include:
- $1 billion in current annual economic contribution to California
- $732 million in California-based marketing spend with platforms like Meta and Google
- $36 million in California-based payment processing fees to companies such as Visa and PayNearMe
- $34 million in cloud hosting fees to California data center operations by providers like Amazon Web Services, Microsoft Azure, and others
- $208 million in household earnings through California-based jobs at companies that work with the industry
- $200-$300 million in potential new state revenue each year
- $15-25 million from operator fees
- $175 million from a 7.25% tax on player purchases
- Additional revenue from advertising, brand partnerships, and expanded market access
Eric Wright, Jeff Duncan Provided Testimonies
At the hearing, Eric Wright, Chief Executive Officer of Kletsel Economic Development Authority, provided testimony in opposition to AB 831, stating, “This bill lacks unanimous support among California tribes, has advanced without meaningful consultation with many of us, and threatens our inherent right to create legitimate revenue streams to support our people.”
Other testimony in opposition to the bill included Virtual Gaming Worlds (VGW) and ARB Interactive.
“California has a choice: ban a thriving industry or regulate online social games to safeguard players, protect $1 billion annually in current economic benefits and unlock hundreds of millions in new revenue for the state each year,” said Jeff Duncan, Executive Director of SGLA and former Congressman.
“California lawmakers now have the opportunity to harness the economic power of a growing and innovative industry while creating a regulatory framework to ensure strong consumer protections.”
The SGLA continues to advocate for a regulatory framework that ensures robust age verification, financial and fraud protections, and provides players with responsible gaming tools such as spending limits and self-exclusion options.