AB 831 Clears California Senate—What’s Next for Sweeps Gaming?

California’s State Assembly immediately got into action on Friday and voted in concurrence with the latest amendments added to AB 831, banning online casino sweeps operators in the Golden State. It was a clean sweep for the bill’s proponents, particularly Assemblyperson Avelino Valencia, who didn’t face any resistance en route to a 63-0 vote. 

Valencia’s bill now heads to Governor Gavin

Newsom’s desk, where he has 30 days to approve or veto the bill. During the hearings, Assemblyman Valencia lamented how players “are able to convert winnings into actual cash”. He further explained that sweeps casinos seem to operate as online casinos “with real cash payouts”.

According to the rules, AB 831 instantly becomes a law if the governor fails to act within the prescribed 30-day period. The Senate was equally persuasive- voting 36-0 last Tuesday.

So, What Happens Next?

Now that the ball is in the governor’s court, a lot of things can still happen while we wait for the signature. Here’s a quick look at the next few steps that the Senate may take in the interim:  

• Stakeholder pushback. The Social Leadership and Gaming Alliance (SGLA) immediately put up a statement after the confirmation of the vote. Jeff Duncan, the group’s Executive Director, expressed disappointment with the outcome of the vote. It’s also expected that other groups will raise their concerns, citing the bill’s use of “broad and vague” language, which may lead to certain risks. The bill’s passage is “incredibly disappointing”, says Duncan, and added that this move would put the state “back of the line in terms of digital innovation in this space”.
• Legal challenges on the horizon. Industry watchers expect some legal challenges, primarily on the definitions of “consideration”,  constitutional issues, and the ongoing debates on free and paid currencies.
• Operators on notice. Now that the bill’s passage is inevitable, many soperators are prepping for their next steps. We can expect at least three possible moves for state sweeps casinos operators: (a) adjust their gaming models, e.g. revamping the dual-currency setup, (b) challenge the bill or lobby for some exemptions, and (c) exit the market.

If AB 831 Becomes a Law, Then…

One of the immediate results of the Valencia bill’s passage is regulatory enforcement and clarity. As soon as the government signs it into law, enforcement starts.  State regulators may start issuing cease-and-desist orders, similar to what’s happening now in Louisiana. Or if the state regulators want softer regulations, then they may impose sanctions and penalties.

Watch Out for the Law’s “Side Effects”

While the sweeps casinos and operators are the direct targets of the law, there will be some collateral damage and spillover effects. For example, some non-sweeps businesses and products, like loyalty programs and promotional games, should pay attention. 

Then, there’s the potential impact of the ban on affiliates and celebs who are promoting and marketing these websites. These stakeholders will be exposed under the law, and their business may be open to scrutiny. 

And if California becomes successful in pushing for the law, other states may follow suit, which can be bad news for most sweeps gaming operators.

REFERENCES

• Assemblyman Avelino Valencia’s Official Page
• California Legislative Information
• Louisiana Gaming Control Board