California has banned online sweepstakes casinos after Governor Gavin Newsom signed AB 831 into law on October 12, 2025. The measure targets the “dual-currency” model used by many sweepstakes sites and makes operating or supporting these games a misdemeanor punishable by fines up to $25,000 and possible jail time.
The law takes effect January 1, 2026, giving companies a brief window to wind down operations or exit the state.
What the New Law Does
AB 831 makes it illegal to operate, offer, or promote an online sweepstakes game that mimics real-money gambling. That includes casinos using two types of credits—one “free” and one you can buy—where winnings can be redeemed for cash or prizes.
Lawmakers say this model looks and feels like unregulated gambling, even when sites claim “no purchase necessary.”
The law also reaches beyond the sites themselves. It bars third parties from knowingly supporting these operations, including payment processors, financial institutions, geolocation services, platform providers, and media affiliates. In short, the state is cutting off the ecosystem that lets sweepstakes casinos run.
Violations can lead to a misdemeanor, with penalties of up to one year in county jail, fines up to $25,000, or both. Supporters say this closes a loophole that allowed casino-style games to operate without the licenses, consumer protections, and oversight required in the regulated market.
According to backers, legitimate promotional sweepstakes tied to real products and California’s existing tribal casinos and state lottery are not the target of this law.
The bill passed the Legislature with no votes against, reflecting strong momentum to address the fast-growing sweepstakes space. It was also supported by major tribal gaming groups, who argued that these products encroached on their exclusive rights to offer gaming under California law.
What It Means for Players and Operators
If you’re a California player, you should expect most sweepstakes casinos to block access in the state by January 1, 2026. The law does not aim to punish consumers, but it shuts down the supply side: operators and their service providers.
Players may still see social games that don’t allow cash-out, and traditional promotional sweepstakes attached to real-world brands can continue, provided they follow existing rules.
For operators, the risk calculus changes overnight. Running or enabling a sweepstakes casino in California now carries criminal exposure. That includes companies providing payments, hosting, game content, geolocation, or marketing support. Many brands have already begun geoblocking Californians or pausing campaigns to avoid violations.
The move also shifts the national conversation. California is the most populous state, so its ban will influence how companies design products, choose partners, and plan compliance in other jurisdictions. Several states are already reviewing similar models; industry watchers expect more bans or stricter regulation to follow.
Not everyone is happy. Some industry groups argue the bill is too broad, could chill innovation, and may cut off digital revenue opportunities for smaller tribes and startups. They’ve pushed for a regulated framework instead of a ban, saying clearer definitions around “dual currency” and “cash equivalents” would protect consumers without eliminating an entire category.
For now, though, the message in California is clear: if your product looks like casino-style gambling online and uses purchasable tokens that can translate to cash, it needs to stop.
