California Sweepstakes Casinos

California gamblers can use sweepstakes gambling sites (also known as social casinos) to play casino-style games like slots and blackjack for real prizes.

Social casinos mimic gambling online in California but implement specific modifications to ensure compliance with federal sweepstakes law:

• California’s social casinos don’t accept cash wagers. Instead, customers use virtual currencies to play online and win cash prizes.
• Social casinos offer ways for California players to participate with no purchase necessary.

The sweepstakes business model provides an effective workaround in states with restrictive online gambling laws, but there are two critical points players should keep in mind:

1. California Does Not Regulate Sweepstakes Casinos

California does not regulate social casinos, so it’s imperative to use reputable operators only.

BettingUSA recommends these sweepstakes casinos in California:

• WOW Vegas Casino
• Stake.US Casino
• Casino.Click

2. Sweepstakes Casinos Are Vulnerable to Regulatory Action

California sweepstakes casinos operate in a legal grey area despite maintaining that they comply with all state and federal laws.

Sweepstakes casinos remain available in California today, but operators face increasing risks of regulatory action.

For one, California’s influential tribal casino operators have declared war against sweepstakes casinos and are pressuring local authorities to act.

Secondly, multiple factors make sweepstakes casinos especially vulnerable in California. Here’s gambling and sports betting lawyer Daniel Wallach on that subject:

California is the most vulnerable state for sweepstakes casinos.

1) Bad case law on consideration

2) A ban on “gambling-themed” sweepstakes

3) A constitutionally enshrined public policy against casino gambling

4) Broad reach of gambling statutes

5) Payment processor exposure

— . (@PrograsiveXPlus) October 23, 2024

Sweepstakes casinos operating in California also face escalating mortal threats in the form of civil lawsuits, including one filed against Pulsz Casino in November 2024 and another filed against High 5 Casino in December 2024.  

Will California Legalize Online Gambling?

A regulated California online gambling industry presents a potential goldmine for operators due to the state’s large population and gambling culture.

However, complex political dynamics and stakeholders’ competing interests make it difficult to estimate whether California will legalize online casinos anytime soon.

Current discussions primarily revolve around online sports betting, but significant progress on that front should expedite California’s efforts to legalize online gambling.

Two issues in particular continue to cause headaches for proponents:

Tribal Operators vs. Card Rooms Dispute

Disagreements between California’s Native American tribes, which operate dozens of casinos, and its card rooms, which have operated in some capacity since the Gold Rush era have killed multiple online gambling proposals.

Since a 2000 voter referendum expanded tribal gaming, the tribes and the card rooms have jockeyed for gaming dollars, sparking years of court battles in the process.

This has been exacerbated by so-called “player-banked” games. The 2000 referendum granted tribes exclusive rights to “dealer-banked” games such as blackjack but allowed card rooms to continue offering card games if players rotate serving as the dealer. To work around the player-dealer requirement, the cardrooms hired third-party “players” to serve as the full-time dealer.

In 2016, then-Attorney General Kamala Harris determined cardrooms could still use third-party dealers if every player was “offered” the chance to deal and that no one player served as dealer for more than an hour without a break. This did little to assuage the tribes, which still actively seek to overturn the opinion.

Legalization Involves a Complicated Legislative Process

The California Constitution requires a constitutional amendment for any gambling expansion.

The crushing defeats of Propositions 26 and 27 in 2022 highlight the unresolved challenges of gaining voter support and finding a compromise that will satisfy gaming tribes, card rooms, and commercial online gambling operators.

Although both measures were related to sports betting specifically, the weaknesses exposed by their defeat apply equally to California’s online gambling efforts.

Examining California’s Competing Stakeholders

California’s various gambling stakeholders and their conflicting interests combine to form the greatest challenge the state must overcome to legalize online casinos.

If California’s tribal casino operators, card room owners, and legislators can reach a compromise on how the state should regulate online gambling, all remaining challenges become relatively insignificant.

Tribal Casino Operators

Tribal casino operators have considerable influence over whether California will legalize online gambling and what the enabling legislation will entail.

The majority of California’s tribal casino operators view legalization with skepticism over concerns that legal online gambling will result in:

• Reduced foot traffic to tribal casinos
• Increased competition from non-tribal entities if commercial operators are permitted to offer online gambling
• Job losses and reduced gaming revenue, which are critical to California’s tribal economies
• Infringement on tribal operators’ exclusive rights to offer banked card games in California

Additionally, the California Nations Indian Gaming Association (CNIGA) seeks consensus among its 50+ member tribes regarding online gambling policy. Thus, CNIGA’s desire to maintain a united front limits the policy proposals it is willing to support.

Recently, the tribes have indicated conditional openness to online gambling, contingent on the following:

• Maintaining significant operational control
• Favorable revenue-sharing arrangements
• Ensuring non-gaming tribes benefit from expanded gambling

Card Room Operators

While California’s card room operators are less influential than tribal casinos, they remain significant in discussions regarding online gambling.

Their bitter dispute with tribal casinos over player-banked card games may also shape future negotiations.

Card rooms generally support legalizing online casinos to boost revenue and compete with tribes on equal footing, but only if they have equal opportunities in the market.

Their primary concern is legislation that excludes or disadvantages them, as this could lead to significant revenue losses, particularly if other entities are allowed to offer poker and similar games.

California Legislators

There is no consensus in the California legislature regarding online gambling.

Lawmakers have mixed opinions on whether to legalize California online casinos, who should be permitted to apply for licenses, where the tax revenue should go, and more.

Proponents in the legislature support legalization for a range of reasons, including:

• To establish a new source of tax revenue for the state
• To allow gaming tribes, card room operators, or both to pursue new revenue streams
• To establish player protections, encourage responsible gambling, and channel Californians away from unregulated black market gambling sites
• To address consumer demand and implement the will of their constituents
• To modernize the state’s gambling industry and respond to legalization measures in neighboring states that will channel entertainment dollars out of California

On the other side of the issue are legislators who either oppose legalization outright or have expressed serious reservations due to:

• Concern that the convenience of online gambling will exacerbate social harms such as gambling addiction
• Pressure from tribal operators to oppose specific bills and anti-gambling advocacy groups to oppose all online casino bills
• The difficulty of reaching a compromise that satisfies card rooms, tribal casino operators, the state government, and voters
• The potential for carelessly drafted legislation to violate exclusivity clauses in tribal-state gaming compacts
• Concern that legislation will favor tribal casinos to the detriment of card rooms and the municipal governments that rely on card room revenue. For instance, tax revenue from The Gardens Casino in Hawaiian Gardens accounts for 68% of the city’s general fund, which supports public safety, after-school programs, fire services, and other essential services.

Market Potential for California Online Casinos

The California online gambling market represents the greatest opportunity in the United States in terms of total market size and tax revenue.

Although market research is limited due to the state’s current focus on sports betting, comparisons to other states with legal online casinos provide insight into California’s online gambling potential.

For instance, consider New Jersey and Michigan. Both states have mature online gambling markets and populations of around 10 million:

Extrapolating those figures to California, which has a population four times that of either state, gives a sense of the market’s massive potential.

However, estimating the revenue that California online casinos could generate isn’t as simple as multiplying other states’ figures.

New Jersey and Michigan are relatively competitive, open markets with effective tax rates ranging from 17.5% to 29.125% and six-figure initial licensing fees.

In contrast, California is likely to take a markedly different approach influenced by politically powerful gaming tribes seeking exclusivity and favorable revenue-sharing agreements.

Florida faced similar complexities when it legalized online sports betting and implemented a unique regulatory framework as a result. California’s situation is even more complicated, with card rooms and commercial operators also vying for seats at the table.

Ultimately, tax and revenue projections will vary significantly depending on the regulatory model California adopts for online casinos.

California Online Gambling FAQ