The Governor of California, Gavin Newson, has formally signed Act No. 831 of Parliament (AB 831), which prohibits online social games that include the elements of a lottery across the state. This “content replacement bill”, which has been in dispute for months, was approved in September with cross-party support from both California Houses, and the new legislation effectively prohibits the use of lottery casinos and daily fantasy sports platforms in the state.
As one of the strongest opponents of the bill, the U.S. Social Games Leadership Coalition expressed disappointment with the signing decision, stating that legislation would undermine economic opportunities and limit consumer choices. Jeff Duncan, Executive Director of the Alliance, said: “The voters, online social games players, California tribes and operators have made a clear statement that they do not want to see this popular and safe form of entertainment prohibited. We had hoped that Governor Newson would be able to see the anti-competitive intentions of the wealthy tribes driving the bill and veto AB 831, but he opted for a short-sighted shortcut, disregarding options, innovation and economic efficiency.”
It is a matter of concern that research data suggest that if the industry is regulated rather than banned, the bill could lead to economic losses of up to $1 billion per year and potential tax losses of $200-300 million in California. A number of First Nations tribes, including the Clerzeldwinton tribe and the Sherwood Valley Bomo reserves, also objected to the bill as undermining tribal sovereignty and constituting injustice to small tribes operating without a casino. The adoption of AB 831 marked an important turn in the field of game regulation in California, one of the largest potential online game markets in the United States. Proponents, including major tribal operators and legislators, argue that the law is essential to protect the power of existing tribal games and to curb unregulated betting.
Legal experts noted that the case would provide jurisprudence for other U.S. states considering the legislation for the lottery, particularly in the ongoing debate on how to define and regulate emerging forms of socialization and outreach.
