California has banned sweepstakes casinos from operating in the state.
It was made official on Saturday when Gov. Gavin Newsom signed AB 321 into law.
These popular social gaming sites, which are a huge hit with slot fanatics and poker players, will need to have left the state completely by the start of 2026.
It’s the biggest blow yet to the $4bn sweepstakes casino industry in the US.
For many players in California, it comes as disappointing news, with millions of them having existing accounts across sites like Stake.us, Chumba Casino, and WOW Vegas, all of which will no longer be allowed in The Golden State.
This, naturally, has left California players, as well as those from other states, wondering what’s next for sweepstakes casinos.
It’s Game Over for Sweepstakes Casinos in California
Gov. Gavin Newsom has signed a bill banning sweepstakes casinos following unanimous approval by the California Legislature.
The state has seen a huge rise in players heading to the sweepstakes casinos over the last few years, many of which offer free bonuses to attract new customers, so it comes as shock news.
It’s even estimated that the US sweeps casino market will lose 20% of its revenue now that California, the biggest state in the country, has pulled out of the sweepstakes market.
The potential fallout from this could be huge, as California has now joined a growing list of states, including Connecticut, Montana, and New Jersey, that have decided to outlaw these extremely popular casinos.
Sweepstakes Casino “Death” Imminent
If you rewind only a couple of years ago, sweepstakes casinos were dominating iGaming in the US.
After exploding among players during the COVID-19 pandemic, which is when Gen Z and Millennials first got hooked, these new types of casinos quickly built a billion-dollar market for themselves.
However, it now appears as though the sweeps casino market could be about to collapse as fast as it rose, with analysts at the recent Global Gaming Expo in Las Vegas predicting a serious decline is coming.
“You really are seeing and hearing the death rattle of the last gasps of the sweepstakes industry as it is currently situated,” said Howard Glaser, the global head of government affairs at iGaming operator Light and Wonder.
He is, seemingly, right, as sweepstakes casinos have had free reign in the US for over a decade now, with almost zero legal consequences or punishment (because sweepstakes casinos make players use ‘Gold Coins’ and ‘Sweeps Coins’ instead of actual money, it’s effectively allowed them to use a legal loophole and dodge gambling laws).
That free reign now appears to be coming to an end, so it will be a case of adapt or face total wipeout if sweepstakes operators do, indeed, wish to survive.
The SGLA Furious Over the Ban
California’s decision to ban sweepstakes casinos has left the SGLA (Social Gaming Leadership Alliance) furious.
The organization was initially pushing to stop the ban being put in place, even sending an open letter to Gov. Gavin Newsom advising him against the move, but it failed to prevent the inevitable.
In their letter, the SGLA begged Newsom not to “destroy a thriving $1 billion California industry” while also pointing to the fact that banning sweepstakes casinos would mean The Golden State loses out on significant tax revenue.
Now, member groups of the SGLA, including VGW, the company behind the highly popular Luckyland Slots and Chumba Casino, will have to absorb the impact of California’s new anti-sweepstakes law and plan their next steps to recoup the loss in revenue that’s just around the corner.
Why California Has Banned Sweepstakes Casinos
Critics have been decrying sweepstakes casinos for years, calling them secret “illegal gambling” sites that pretend to be something else.
For those out of the loop, sweepstakes casinos don’t operate like traditional casinos do, instead allowing users to play with Gold Coins or Sweeps Coins (those who collect enough of the latter can then redeem them for prizes).
It’s a smart legal loophole that’s led to a surge in states across the US filing anti-sweepstakes casino bills, including Nevada, New York, and, of course, California.
California has been the most aggressive when it comes to outlawing sweepstakes casinos, with the state moving to safeguard customers and also prevent these sites from further exploiting an unregulated gambling market.
Over the years, casino-owning tribes in California have also spent millions in court trying to force their sweepstakes competitors out of the state’s casino business, which seems to have been successful in the build up to Gov. Newsom signing the dotted sign.
Growing Popularity of ‘Sweepstakes Poker’, a Free-Play Alternative
With California now having banned sweepstakes casinos and a growing number of other states pushing to do the same, it’s going to harm what was a fast-growing sweepstakes poker market.
Sites like Stake.us, which has its exclusive ‘Stake Poker’ game, have attracted countless poker players over recent years, allowing casuals to play for free and the more competitive players to enter actual poker tournaments and compete for prizes.
But with the sweepstakes market now taking a hit, many sweepstakes poker players could potentially end up migrating back to traditional online poker sites and casinos.
Global Poker, the biggest sweepstakes poker site of them all, will no longer be available in California either, although US players will still be able to access the site from other states.
The $4bn US Sweepstakes Casino Market Has Taken a Hit, But Won’t Disappear
It’s been a rough year for sweepstakes casinos.
From several player-filed lawsuits to a growing number of states pushing to have them banned, it’s now been capped off with California exiting the market.
Other states, including New York, could be about to fully join that list, too, so it’s fair to say sweepstakes casinos are on the ropes.
But with so many active players in this existing $4bn market, as well as a booming audience on streaming sites like Kick and Twitch, sweepstakes casinos won’t be disappearing.
It could, potentially, reach a stage where these new casino sites are banned in around 10 (or more) states, but the market itself will continue to thrive, albeit not as strongly as it did during the 2020 to 2023 gold rush.
Driven by slot fans and passionate poker players, there’s still plenty of life in sweepstakes casinos yet, although these sites will have to adapt fast to avoid further legal trouble.
