VGW, the sweepstakes mega-brand behind Chumba Casino, LuckyLand Slots, and Global Poker, is throwing its weight against California Assembly Bill 831, which would ban online sweeps gaming sites in the state.
And it is telling lawmakers it’s open to being creative in order to preserve a place for sweeps in the regulated California market.
Update: VGW tells Sweepsy it has implemented sales tax in a handful of states.
‘We want to work collaboratively with the California Legislature’
AB831 is set to receive a hearing in front of the Senate Governmental Organization Committee at 9 a.m. local time Tuesday.
VGW provided its perspective in the “ARGUMENTS IN OPPOSITION” section of the bill’s legislative analysis for that committee hearing.
“Rather than an outright prohibition, VGW and the social online games industry are asking that you park this rushed, gut-and-amend legislation and hear our side of the story,” the quote from VGW reads. “We want to work collaboratively with the California Legislature on sensible legislation that creates a robust regulatory framework prioritizing consumer protection while simultaneously offering a new revenue stream for the state. The economic opportunity is significant. Based on industry projections by Eilers & Krejcik, California could generate annual revenue of $149 million through sale tax alone.
“Currently, there is no method for us to pay sales tax in California because ours is a digital product, but this is something we would be happy to do under an appropriate framework. We are also open to other potential sensible taxation frameworks and/or revenue stream to benefit the people of California.”
VGW, the Social Gaming Leadership Alliance, the Social and Promotional Games Association, and the American Transaction Processors Coalition are listed as the four groups under “OPPOSITION” in the bill analysis. (The American Transaction Processors Coalition is a trade association that represents companies in the transaction processing industry, particularly those that provide payment processing and financial tech services.)
The analysis also includes a quote from the SGLA:
“AB 831 seeks to outlaw an entire category of digital promotions and entertainment, which have existed and operated legally for many years, using language so broad that its full impact is impossible to predict. The bill was amended at the last minute, without stakeholder input, without supporting data, and without clear evidence of harm. Before California creates new crimes, restricts speech, and disrupts legitimate businesses, the Legislature should take a more thoughtful and transparent approach and make this a 2-year bill. Disrupting an entire legal industry in less than two months without adequate debate, education, public outreach, and evidence supporting the proponent’s arguments seems extremely short-sighted and irresponsible.”
AB831 support mostly comes from tribal, local government organizations
There are 18 groups listed under “SUPPORT” …
Nine are affiliated with tribal gaming:
- California Nations Indian Gaming Association
- Tribal Alliance of Sovereign Indian Nations
- Yuhaaviatam of San Manuel Nation
- Agua Caliente Band of Cahuilla Indians
- Big Valley Band of Pomo Indians
- Elk Valley Rancheria
- Morongo Band of Mission Indians
- Soboba Band of Luiseño Indians
- Table Mountain Rancheria
Three are affiliated with commercial gaming:
- Sports Betting Alliance
- Light & Wonder
- American Gaming Association
Two are related to responsible gambling:
- Almond Digital Health
- California Council of Problem Gambling
Four are related to local government or small business:
- Dawn Rowe, Third District Supervisor, San Bernardino County
- Highland Area Chamber of Commerce
- Hispanic Coalition of Small Businesses
- Shanon Dicus, Sheriff-Coroner, San Bernardino County
In the “ARGUMENTS IN SUPPORT” section, the Yuhaaviatam of San Manuel Nation is quoted as saying:
“Certain companies are exploiting loopholes in existing state law to offer online games that closely mimic casino-style games – such as slot machines – and sports betting allowing users to wager with coins that can ultimately be exchanged for cash or prizes. These sweepstakes coins are ‘given’ to a player when they purchase non-monetary ‘coins’ that cannot be redeemed. This ‘dual currency’ model cannot disguise the fact that users are able to purchase and wager with coins that have real-world value, thus making the games illegal gambling. AB 831 aims to close this loophole by amending the California Business and Professions Code to strengthen existing sweepstakes laws. It clarifies the illegality of internet-based sweepstakes that use the dual currency model and reinforces California’s stance against such unregulated gambling.”
The path ahead for AB831
Not only would AB831 ban online sweepstakes gaming sites in California, it would also target endorsers who promote the sites in California — such as Drake with Stake.us, Paris Hilton with WOW Vegas, and Ryan Seacrest with Chumba Casino — as well as affiliate sites that publish deals for such sites in California.
A previous version of AB831 passed through the Assembly in May. However, since the bill has been fully amended to now focus on sweeps casino gaming, it must restart the legislative process from scratch. Tuesday’s hearing marks a key initial milestone.
