On October 11, 2025 California joined other states in a push against sweepstakes casinos when Governor Newsom signed AB 831. The law prohibits operating or supporting “online sweepstakes games” that use a dual-currency model and simulate gambling within the state. Violations are criminal misdemeanors, carrying penalties of up to one year in jail and $25,000 per violation.
While several states have moved to curb these casino-style sweepstakes, California’s law stands out for its reach. It not only bans operators but also extends liability to vendors and partners—such as geolocation providers, payment processors, content suppliers, and media affiliates—who “knowingly and willfully” support these platforms. The law takes effect on January 1, 2026.
What Are Sweepstakes Casinos?
Dual-currency “sweepstakes casinos” operate on two nearly identical gameplay loops of casino-style games, such as slots or poker, fueled by two types of in-game currency:
- Gold Coins (“GC”) are purchased for play but cannot be redeemed; they let users engage for “entertainment.”
- Sweeps Coins (“SC”) are redeemable for cash and often distributed “for free” alongside Gold Coin purchases or through separate promotions.
Operators rely on the premise that neither “loop” constitutes gambling on its own, since GC purchases don’t award prizes and SC play is nominally free. However, in some contexts, regulators have asserted that consumers do not actually utilize GC, and instead are driven to purchases of GC by the promise of additional SC. Of course, any sweepstakes promotion is intended to drive sales of a product—sweepstakes operators therefore contend that the SC is a legitimate promotional tool utilized to promote the sale of GC, which players routinely use for in-app progression and other legitimate entertainment purposes.
With that said, some sweepstakes casino operators have attempted to blur the line between promotion and product by allowing users to toggle purchase displays to show how much SC each purchase includes. Further questions arise when redeemable SC that is won in games or contests are used as entries into other games awarding real prizes.
These contrasting contentions and blurred lines have fueled skepticism from some regulators over whether “free with purchase” sweepstakes casinos are genuine promotions or indirect gambling. California’s AB 831 addresses this concern directly, prohibiting dual-currency systems that simulate gambling for cash or cash equivalents.
What AB 831 Does
AB 831 amends California law in two key ways. First, it updates Business & Professions Code §17539.1, expanding unfair business practice provisions to cover web- and app-based gambling simulations using dual currencies. Second, it creates Penal Code §337o, which makes it unlawful to operate or support an “online sweepstakes game” that:
- Uses direct or indirect consideration via a dual-currency system;
- Simulates gambling (e.g., slots, video poker, table games, bingo, sports wagering); and
- Awards cash or cash equivalents.
The law preserves legitimate promotional sweepstakes tied to bona fide product sales—for example, a free contest entry with a restaurant purchase remains lawful.
Why Vendors and Affiliates Should Care
One of AB 831’s most consequential provisions is its direct extension of liability to vendors. Under the new Penal Code section, it is unlawful for “any entity, financial institution, payment processor, geolocation provider, gaming content supplier, platform provider, or media affiliate” to knowingly and willfully aid in the operation or promotion of an online sweepstakes game in California.
That language creates compliance risk across the ecosystem—not just for operators but also for the payment processors, app stores, content studios, and marketing partners that make these platforms possible. Enforcement is expected through both criminal prosecutions under the Penal Code and civil actions under the Business & Professions Code.
Even before AB 831 was signed, California authorities were testing these theories under existing laws. In August 2025, the Los Angeles City Attorney filed a first-of-its-kind civil action against sweepstakes platform Stake.us and several vendors, including game suppliers and a streaming partner, alleging operation of an illegal gambling enterprise. That case previewed the kind of joint operator–vendor enforcement the new statute now expressly authorizes—and caused several vendors to leave the state.
Part of a Broader State Trend
California joins a growing list of states moving from regulatory warnings to outright bans or hard-edged enforcement against dual-currency “sweepstakes casinos.” Across the country, legislatures and regulators are increasingly addressing the same questions that AB 831 now addresses, signaling a coordinated shift away from tolerating casino-style products that cash out “sweeps coins.”
In New Jersey, Governor Phil Murphy signed A5447, banning most dual-currency online sweepstakes and establishing enforcement mechanisms. Meanwhile, in New York, the Legislature passed S5935/A6745 to prohibit operating and supporting online sweepstakes games and to authorize enforcement by both the Gaming Commission and attorney general; the bill has not yet been signed by the Governor. In the meantime, the New York Attorney General announced actions against 26 sweepstakes platforms, all of which have since ceased sweepstakes coin sales in the state.
Other states have opted for enforcement rather than new legislation. In West Virginia, after months of subpoenas from the Attorney General, more than 20 platforms exited the state. Maryland’s regulator issued cease-and-desist letters,including an order directing VGW—operator of Chumba Casino, LuckyLand Slots, and Global Poker—to leave the state. Similarly, Michigan’s Gaming Control Board has issued multiple waves of cease-and-desist orders targeting unlicensed online gambling and sweepstakes operators.
Other jurisdictions have expanded existing gambling definitions to capture dual-currency models. Montana’s SB555, signed by Governor Gianforte, broadened the state’s definition of “internet gambling” to include any form of currency—language likely encompassing sweepstakes casinos. Connecticut followed suit, as Governor Lamont signed SB1235 to expand its existing sweepstakes ban to include online simulated casino games and sports wagering.
Louisiana also has been active, even though Governor Landry vetoed a bill that would have expressly banned sweepstakes casinos—Governor Landry stated that such operations were already illegal under existing law, so the bill would have been unnecessarily broad. Following that veto, the Louisiana Attorney General issued an opinion reaffirming that position. At the same time, the state opened a new enforcement front focused on tax recovery. In September, the Louisiana Department of Revenue filed suit against VGW and WOW Vegas to recover roughly $44 million in unpaid sales taxes, interest, and penalties on virtual coin sales—the first action of its kind aimed at sweepstakes casinos’ unremitted tax revenue. That suit followed the attorney general’s opinion deeming sweepstakes casinos unlawful after the vetoed ban bill but interestingly does not rely on the theory that the games are illegal.
This accelerating mix of legislation, enforcement actions, and novel tax recovery efforts reflects a national trend against dual-currency sweepstakes and “social casino” models, with legislatures and regulators both jointly aiming to disrupt the existing largely-unregulated landscape.
Practical Implications and What’s Next
California’s AB 831 adds criminal and civil tools to target dual-currency “sweepstakes casinos,” and its vendor liability provisions broaden exposure beyond operators to the companies that support them. Together with pending and enacted laws in other states, the measure underscores a coordinated shift: regulators are narrowing or removing distinctions between social gaming and gambling.
For businesses, the takeaway is less about one law and more about momentum. Several states appear to be adopting the view that cash-out social casinos (sweepstakes casinos) fall within gambling prohibitions, and enforcement is expanding quickly. Companies involved in game content, payments, or marketing may wish to revisit compliance programs and monitor state-by-state developments as these prohibitions take hold.
