California Governor Gavin Newsom has signed Assembly Bill 831 (AB 831) into law, officially banning online sweepstakes gambling across the state. The measure, which passed both the State Senate and Assembly unanimously, will take effect on January 1, 2026, and makes California the 17th U.S. state to take legal action against sweepstakes casinos.
The new law prohibits operating or facilitating online sweepstakes or dual-currency gambling systems that mimic real-money casino play. It extends liability beyond operators to include entities such as payment processors, financial institutions, gaming content suppliers, geolocation providers, platform operators, and media affiliates that knowingly support or promote sweepstakes activities. Violators will face misdemeanor charges punishable by fines of up to $25,000, up to one year in county jail, or both.
Backers of the bill argue that, for years, sweepstakes casinos have operated in a legal gray area, presenting themselves as “social” gaming platforms while allowing users to purchase virtual coins and redeem winnings for cash. Lawmakers described AB 831 as a necessary step to close this loophole and establish clear boundaries between licensed gambling and unregulated play.
“These companies were exploiting a technicality,” said Assemblymember Avelino Valencia, who introduced the bill. “AB 831 reaffirms that gambling in California must be licensed, transparent, and accountable.”
The legislation includes exemptions for licensed operators such as tribal casinos and the state lottery, as well as for legitimate promotional sweepstakes tied to real products and services. Individual players are not held liable under the law.
AB 831 received strong support from California’s tribal gaming community, which argued that sweepstakes casinos had infringed upon their exclusive gaming rights.
Lawmakers also emphasized that unlicensed sweepstakes platforms posed risks to consumers by operating outside regulatory oversight and responsible gaming requirements. The Senate approved the measure on September 8 with a 36–0 vote, followed by a unanimous 63–0 vote in the State Assembly on September 12.
While the law enjoyed bipartisan political backing, it drew opposition from the Social Gaming Leadership Alliance (SGLA), an organization representing sweepstakes operators. The group argued that the ban could cost California over $1 billion in annual economic activity and result in hundreds of millions in lost tax revenue.
SGLA Executive Director Jeff Duncan criticized the Legislature’s decision: “Today’s hearing exposed the committee’s complete disregard for facts, economic reality, and the voices of tens of thousands of Californians all to hand monopoly power to tribes that have already invested hundreds of millions of dollars in Las Vegas and California coastal properties.”
Social gaming industry concerns also extend to how the law’s broad liability language could affect non-gambling businesses, including technology firms and advertisers. Some smaller tribal and community gaming interests expressed fears that the law could limit future digital opportunities for revenue diversification.
In anticipation of the bill’s passage, several sweepstakes casino operators, including High 5 Casino and Fortune Coins, have already begun restricting California players. Others are reportedly updating compliance systems to meet the new regulatory standards before the 2026 deadline.
California’s move aligns with a national effort to curb gray online gambling. Earlier this year, Montana, Connecticut, and New Jersey enacted similar bans, while proposals in New York and Nevada await gubernatorial approval. Given California’s size and influence, observers expect its decision to accelerate similar action in other states, setting a new benchmark for regulating sweepstakes-style platforms across the country.
Supporters of the law argue that AB 831 restores integrity to California’s gambling environment by ensuring that all gaming operations are licensed, accountable, and compliant with consumer protection standards. For tribal casinos and state regulators, it represents an important step toward reinforcing legal clarity and safeguarding the market from unregulated operators.