California Senate amends Assembly Bill 831 on sweepstakes gambling to clarify scope

California lawmakers have amended Assembly Bill 831 (AB 831), a measure seeking to outlaw online sweepstakes gambling, for the second time in the state Senate as debate intensifies over its scope and impact.

The bill, which cleared its final committee on Aug. 29 after passing the Assembly earlier this year in an altered form, was revised again on Sept. 3 during its third reading and returned to second reading for further consideration.

The latest changes clarify that retail promotions such as those offered by Starbucks or McDonald’s will not be prohibited. According to the text: “These provisions do not make unlawful game promotions or sweepstakes conducted by for-profit commercial entities on a limited and occasional basis as an advertising and marketing tool that are incidental to bona fide sales of consumer products or services.”

Lawmakers also specified that the legislation will not affect the California State Lottery or games conducted by licensed operators under the Gambling Control Act, while replacing the term “gambling-themed games” with “gambling.”

A new Section 1 makes clear the law only applies to those who “knowingly and intentionally” promote or facilitate dual-currency sweepstakes. Ancillary providers such as banks, payment processors, and geolocation companies are shielded from liability if they are not aware of their role.

Suppliers, platforms, and affiliates would face penalties only if they act “knowingly and willfully.” Earlier Senate amendments in July ensured individual players would not be criminalized.

The measure is strongly backed by the Yuhaaviatam of San Manuel Nation, other major gaming tribes, and the California Nations Indian Gaming Association (CNIGA). But opposition has emerged from smaller tribes, including the Kletsel Dehe Wintun Nation, a new partner of social gaming operator VGW, and the Sherwood Valley Band of Pomo Indians, which warned the ban could harm smaller tribes exploring digital gaming.

Longtime sweepstakes operator Publishers Clearing House and the California Cities Gaming Authority, which represents cardrooms, have also spoken against AB 831. Critics argue the ban may increase economic inequality and restrict tribal autonomy in online gaming. A cardroom representative previously testified that operators expected to be accommodated in the legislation but were instead left vulnerable.

Sweepstakes casinos, which offer cash-redeemable prizes and present themselves as promotional contests, operate in a legally ambiguous space similar to unauthorized online gambling. Several U.S. states have cracked down, with New York, Connecticut, Montana, Nevada, and New Jersey passing formal bans, while Washington, Michigan, and Idaho maintain long-standing restrictions. Delaware, Louisiana, West Virginia, and Maryland have forced dozens of operators out through cease-and-desist orders and subpoenas.

Massachusetts is also considering legislation, with House Bill 4431 proposing a similar ban.