Gambling: operation of a contest or sweepstakes.

Valencia’s proposal tightens California’s approach to online sweepstakes by prohibiting platforms that use a dual-currency system to simulate gambling and by creating a new misdemeanor for operating or knowingly supporting such online sweepstakes within the state. The measure broadens the concept of gambling to include lottery-style games, bingo, sports wagering, and other activities that mimic gambling, while preserving carve-outs for licensed gambling enterprises and for promotional sweepstakes incidental to bona fide sales where no ongoing gambling structure is established.

Key mechanisms include amending the unfair acts or practices governing contests and sweepstakes to explicitly bar online methods—such as websites or apps—that predetermine prizes or rely on a dual-currency model to engage participants. The changes expand the range of prohibited practices to cover direct or indirect consideration used to participate in simulated gambling online and require disclosures (such as the total anticipated number of contestants, the odds, maximum payments, and prize-related terms) at solicitation, during promotions, and when money is required to participate. The bill also clarifies that these provisions do not render lawful a contest or sweepstakes that does not award cash prizes or cash equivalents and retains exemptions for lawful activities of licensed gambling operations and for limited, incidental promotional activities.

A new Penal Code offense—criminalizing the operation, conduct, or promotion of online sweepstakes within the state—authorizes penalties as a misdemeanor with fines ranging from $1,000 to $25,000 and potential imprisonment up to one year. It also makes it unlawful for certain intermediaries, including financial institutions, payment processors, geolocation providers, platform providers, gaming-content suppliers, and media affiliates, to knowingly and willfully support such online sweepstakes. The definitions center on an “online sweepstakes game” that is accessible online, uses a dual-currency system, simulates gambling, and may award cash or cash equivalents. Carve-outs reiterate protections for lawful, licensed activities and for promotional campaigns incidental to bona fide sales, not designed to establish ongoing gambling.

Implementation and policy context accompany the changes: the bill states that no reimbursement is required for local agencies, subjects the measure to fiscal committee review, and aligns with existing exemptions for licensed gaming and the state lottery. Enforcement would hinge on criminal prosecutions under the new offense and on existing mechanisms for unfair practices in contests and sweepstakes, with particular attention to operators and a broad set of intermediaries in the online ecosystem. The proposal also signalingly clarifies its scope relative to dual-currency online promotions while emphasizing that incidental, non-gambling marketing activities remain outside its reach.