California Matters

All eyes in California have turned to sweepstakes, but that's not the only gambling-related battle taking place in the Golden State.

Steve Ruddock

Jun 26, 2025

THE LEDE: A deep dive into California’s sweepstakes bill.
BEYOND the HEADLINE: A look at San Manuel’s social casino.
ROUNDUP: A pair of unicorns; Joe Asher is back; RI bill expanding OSB market fails; Delta sends out sports betting survey.
NEWS: New Jersey bumps online gambling tax; Ohio says no.
VIEWS: Why does the industry use so many bad metrics?
AROUND the WATERCOOLER: California AG takes aim at DFS.
STRAY THOUGHTS: Sporttrade’s new prediction market Substack.

Sponsor’s Message: Increase Operator Margins with EDGE Boost Today!

EDGE Boost is the first dedicated bank account for bettors.

Increase Cash Access: On/Offline with $250k/day debit limits
No Integration or Costs: Compatible today with all operators via VISA debit rails
Incremental Non-Gaming Revenue: Up to 1% operator rebate on transactions
Lower Costs: Increase debit throughput to reduce costs against ACH/Wallets
Eliminate Chargebacks and Disputes
Eliminate Debit Declines
Built-in Responsible Gaming tools

To learn more, contact Matthew Cullen, Chief Strategy Officer, Matthew@edgemarkets.io

The Lede: California’s Sweeps Bill: What it Says

California’s AB 831, which initially aimed to extend the approval time for tribal compacts, has been stripped of its original language and replaced with a ban on sweepstakes casinos.

The new language was proposed by Assemblymember Avelino Valencia. It was co-sponsored by the Yuhaaviatam of San Manuel Nation, the California Nations Indian Gaming Association (CNIGA), and the Tribal Alliance of Sovereign Indian Nations (TASIN).

The bill takes aim at online sweepstakes operators that simulate casino-style games that use a dual-currency system, which it defines as allowing, “a person to play or participate with direct consideration or indirect consideration, and for which the person playing or participating may become eligible for a prize, award, cash, or cash equivalents or a chance to win a prize, award, cash, or cash equivalents.”

It also targets companies that facilitate or promote the activity, up to and including celebrity endorsers:

“It is unlawful for any person, entity, financial institution, payment processor, geolocation provider, gaming content supplier, platform provider, or media affiliate to support directly or indirectly the operation, conduct, or promotion of an online sweepstakes game within this state.”

The two sweepstakes trade groups Social & Promotional Games Association (SPGA) and the Social Gaming Leadership Alliance (SGLA), unsurprisingly oppose the bill, calling it a “rushed proposal, which subverts proper process,” and arguing that it would drive players to unregulated black markets and impact legitimate businesses, such as Marriott and Starbucks.

AB 831 is being fast-tracked in the Senate, where it is on third reading. If passed, it would head back to the House for concurrence and then to the desk of Gov. Gavin Newsom. The legislative session is scheduled to conclude on September 12, 2025, with the potential for a carryover to 2026 if not completed by then. However, 2026 will likely be a challenging year for passing legislation. Gov. Newsom is term-limited and will be replaced in 2026, which is also a mid-term election year.

Beyond the Headline: What About Tribal Sweeps?

As noted, the new bill has the support of San Manuel (it also has widespread support from other tribes). And with that backing, a point of contention has emerged: San Manuel’s PlayOnline by Yaamava social casino, which sometimes offers free-to-play sweepstakes.

Sweepstakes supporters have pointed out this seeming contradiction, and others have wondered if the language in the bill would make San Manuel’s own sweepstakes contests illegal.

However, as was discussed on the Indian Gaming Association’s New Normal webinar series on Wednesday, there are several differences between the Yaamava’ social casino and what we lump into sweepstakes categories:

Yaamava’ doesn’t use a dual-currency system; it’s a social casino where you can purchase virtual coins that have no value and cannot be cashed out.
The sweepstakes entries in the above promotion are awarded by logging into the site twice daily, not through a purchase.
The promotion has a clear start and end date.

Roundup: Joe Asher Is Back; RI Bill Expanding OSB Market Fails; Delta and Sports Betting

Kalshi and Polymarket hit unicorn status [SBC Americas]: Kalshi announced the closing of a $185 million Series C funding round yesterday, valuing the company at approximately $2 billion. Meanwhile, “Crypto-focused derivatives exchange Polymarket is reportedly completing a $200 million funding round that will value the company at roughly $1 billion. The round is being led by a fund operated by billionaire and former PayPal CEO Peter Thiel.” Some strong analysis from Dustin Gouker’s Event Horizon newsletter. Previous STTP coverage of the prediction market opportunity.

Joe Asher launching independent sportsbook in Nevada [Nevada Independent]: One of the biggest names in US sports betting, Joe Asher, plans to launch a non-casino-owned sports betting operation by the start of the fall football season. Asher told the Nevada Independent, “I know there is an appetite from independent casino operators for an independent sports book.” The business is aimed at smaller casinos. “Asher’s pitch is that having an independent operator avoids corporate gaming giants — potential competition — from managing the sportsbook inside their property and having access to their customers.”

Rhode Island punts on ending sports betting monopoly [InGame]: Legislation that would have expanded the Rhode Island sports betting market failed to pass the state House of Representatives, meaning the current lottery-run monopoly will remain in place. As STTP previously reported, “Under the bills (S 748 and H 6048), Rhode Island’s current sports betting contract with IGT (Sportsbook RI) would not be renewed, and the sports betting market would be opened to at least five operators.”

Delta survey asks about in-flight sports betting [View from the Wing]: A recent Delta Air Lines survey asked passengers about their interest in accessing sports gambling via Delta’s Wi-Fi. Despite federal laws prohibiting in-flight gambling, Delta entered into a partnership with DraftKings in January 2025. Delta could offer non-monetary games to comply with existing laws, allowing passengers to potentially earn SkyMiles.

SPONSOR’S MESSAGE - Episode 76: Are Sportsbooks wrong about structural hold?

Host Brad Allen is joined by Alun Bowden and former Fanatics trading SVP Andy Wright to discuss:

Recent analyst questions about sportsbooks missing hold expectations
Whether there are holes in SGP pricing
Why books might have a messaging problem

Listen to the episode here.

News: States That Have or Are Considering Tax Increases

Here’s a look at the states that have increased taxes on online gambling operators and those with active efforts to do the same.

Here are the states that have increased taxes since 2023:

Ohio (2023): Doubled its tax rate from 10% to 20% in 2023.
Tennessee (2023): Shifted from a 20% revenue tax to a 1.85% handle tax.
Illinois (2024): Shifted from a flat 15% rate to a tiered tax rate of 25-40% in 2024.
Maryland (2025): Increased the tax on mobile sports betting from 15% to 20%.
Louisiana (2025): Bumped its tax rate from 15% to 21.5%.
Illinois (2025): Added a $.25 per wager fee on the first 20 million wagers and $.50 thereafter.
New Jersey (2025) all but official: Gov. Phil Murphy’s budget originally called for a tax increase on sports betting and iCasinos to 25%, but a deal with the legislature will see the rate increased to 19.75% (plus 2.5% IAT for iCasino and 1.25% on sports betting). The current iCasino tax rate is 15%, and OSB is taxed at 13%.

The states that have reduced or eliminated promotional deductions:

Louisiana (2024): Reduced the amount of promotional spending that gaming operators can deduct from their tax obligations.
Colorado (2024): Imposed a phased reduction on the amount of promotional spending that sports betting operators can deduct from their taxable revenue.
Maryland (2024): Decreased the allowable deductions for promotional spending by gaming operators.
Virginia (2024): Reduced the amount of promotional spending deductions for sports betting operators.
Colorado (2025): passed a bill that sunsets promo bet deductions.

Active efforts to increase taxes:

Wyoming: A Wyoming committee has voted unanimously to draft legislation that would double the current rate from 10% to 20%. The committee also voted to draft bills to raise the HHR tax from 1.5% to 2.5% and another to increase the tax on skill-based games to 5%.
Ohio: A bill, SB 150, introduced back in March, would increase the sports betting tax rate from 20% to 36%. A tax increase wasn’t included in the state budget and is likely dead, as Gov. Mike DeWine (a supporter of online gambling tax increases) can only line-item veto the budget; he cannot add items.
North Carolina: The North Carolina Senate’s budget raises the sports betting tax increase from 18% to 36%. The House’s budget doesn’t increase the rate.
Massachusetts: SD 1657 would increase the sports betting tax rate to 51%, among many other policy adjustments.

Views: More on Bad Metrics

Not too long ago, I wrote a feature column on how the industry’s propensity to use the wrong metrics has “created an environment where the sports betting industry is chasing vanity metrics instead of building a sustainable ecosystem.”

“However, as we continue to rely on handle numbers, a misleading narrative begins to take shape, particularly with all the promotional dollars in circulation. Handle is a seductive but deceptive figure, often inflated by promotional dollars that drive short-term betting activity without ensuring long-term profitability.
“[…]
“Another factor to consider is how much handle a bonus dollar generates. Many customers will recycle their winnings. A $100 free bet can generate $1,000 in wagers as customers recycle winnings, but without payback and retention data, the industry risks crafting a narrative of handle growth that obscures underlying challenges.
“Essentially, sportsbooks can stimulate (or simulate, depending on how you look at it) growth as long as everyone continues to focus on handle simply by distributing more promotional dollars.”

And here’s a great breakdown of the problem with GGR, namely, people not understanding what it is:

Around the Watercooler

Social media conversations, rumors, and gossip.

I’ve been hearing rumblings that California Attorney General Rob Bonta is about to do what no other California Attorney general has done to date, and it looks like it’s inching closer to reality.

Per local station KCRA 3:

“California Attorney General Rob Bonta is soon expected to deem all online fantasy sports platforms illegal in the state, multiple sources confirmed to KCRA 3.
“Within a matter of days, Bonta is expected to release a legal opinion with more details and why he came to this conclusion, according to several sources unauthorized to speak publicly about the decision.”

The opinion is the latest gambling domino to fall in California, which has seen the following developments in 2025:

Stray Thoughts

A new prediction markets/betting exchange newsletter just dropped from the folks at Sporttrade:

It’s definitely one you should subscribe to:

Reminder: STTP is on break from June 30 to July 6.