Fate of US sweepstakes hangs in balance after California signing

Summary

Governor Gavin Newsom has signed Bill AB831, criminalising sweepstakes operators and those who supply the vertical in California. The law, passed unanimously by the state legislature, places the Golden State alongside Montana, Connecticut and New Jersey in outlawing sweepstakes-style online games, with similar measures pending in New York and Nevada.

The move is being framed as a major blow to the sweepstakes industry: industry lawyers and trade figures say investors, payment processors and suppliers are already pulling back, and commentators warn that further large states may follow. Tribal gaming groups backed the bill, while sweepstakes industry associations opposed it, arguing economic benefits for the state.

Key Points

AB831 makes operating sweepstakes and supplying the vertical a criminal offence in California; it passed unanimously.
California now joins several states that have banned or restricted sweepstakes, shrinking the legal market significantly.
Industry sources say 17 states have treated sweeps as illegal gambling; six more present material legal risk.
Investors, payment processors and licensed suppliers are reportedly exiting the sweepstakes market.
Eilers & Krejcik Gaming valued the US sweepstakes market at around $5.6bn earlier in 2025, highlighting consumer demand.
Experts warn that without a unified iGaming framework, a fragmented legal landscape will fuel an unregulated ‘Wild West’ online market.
California tribal gaming bodies supported AB831 and criticised sweepstakes lobby groups for their campaigning.

Context and relevance

This development is significant because California is the most populous US state; its ban materially reduces the reachable market for sweepstakes operators and raises the legal and commercial risks for related businesses across the country. The story sits at the intersection of regulation, payments, investment and tribal gaming politics. It also underscores a persistent US issue: expansion of regulated online gaming remains fragmented, and industry division risks creating a larger illegal market unless states co-ordinate policy.

Why should I read this

Put simply: this changes the map. If you’re in igaming, payments, compliance or investing, this affects licences, partner relationships and revenue forecasts. We’ve read the detail so you don’t have to — this is the cliff notes on why swathes of the sweepstakes market may evaporate and what that means next.