California takes a step toward joining the sports betting states

Jay Dieffenbach

The U.S. sports betting landscape is never going to be complete without legalized wagering in California, but the nation’s most populous state is moving closer to legalized sports betting.

As sports fans gaze longingly at the progress made in other states, sports betting in the Golden State has earned its spot on next year’s calendar.

A voter initiative, which is being pushed by the state’s Native American tribes and is limited mainly to their casinos will be up for a vote on the November 2022 ballot, according to the California Secretary of State’s office.

“This is an important step toward giving Californians the opportunity to participate in sports wagering while also establishing safeguards and protections against underage gambling,” said Mark Macarro, tribal chairman of the Pechanga Band of Luiseño Indians.

Tribal casinos and horse racing tracks would be able to accept sports bets, though the initiative is likely to face a fight because the bill excludes California card clubs from realizing any benefits from the potential billion-dollar market.

There is no sure path to sports betting legalization just yet

Those card clubs are expected to strongly oppose the measure, citing fears of monopolization.

According to the Los Angeles Times, the campaign committee "No on the Gambling Power Grab" reported raising more than $1 million in cash contributions last year.

“This initiative does nothing to advance sports wagering, and instead expands the tribal casinos' tax-free monopoly on gaming and rewards those operators for prioritizing their own wealth over public health and safety,” said Kyle Kirkland, president of the California Gaming Association.

The tribes, with a definite strength to go with an extremely vested interest, were able to suppress a bill in the Legislature in 2020 allowing online and mobile sports betting.

It wasn’t a weak effort by lawmakers, either, given that bill was supported by the NBA, Major League Baseball, the PGA Tour and the San Francisco Giants, Oakland A’s, Golden State Warriors, Los Angeles Dodgers and Los Angeles Angels.

California can see what it’s missing, given the momentum that has seen more than 25 states legalize sports betting.

“It’s very popular; it’s on fire across the United States,” said Victor Rocha, a consultant to tribal casinos in California and elsewhere, in the Sacramento Bee.

The stakes are especially high in California, one analyst told the Los Angeles Times.

“California is easily the largest prize in the U.S. sports betting market,” said Chris Grove, a managing director for research firm Eilers and Krejcik Gaming that advises state lawmakers on the subject.

He estimates the state could realize $1 billion in gross annual revenue without online betting — as the tribal initiative proposes — and $3 billion if the state expanded it to include online wagering.

The tribes’ consortium includes Yolo County as well as gaming tribes in Southern California.

The Yocha Dehe Tribal Council said Native Americans should take the lead on sports betting.

“It takes expertise to successfully implement legalized sports wagering. In California, that expertise resides with the tribal gaming enterprises,” a council statement said. “We are grateful to the many California citizens who put their faith in us to competently implement this new form of entertainment and whose signatures helped to get this initiative on the ballot.”

The moneymaking benefits are clear

Ken Adams, a casino industry consultant in Reno, is convinced Californians will vote for the initiative.

“It hasn’t failed in any state so far,” Adams told the Sacramento Bee. “It’s the most openly embraced expansion of gambling in my lifetime …. It’s as popular as anything in the country.”

Obviously, California has a rabid sports following with pro franchises including Major League Baseball teams, four National Basketball Association teams, three National Football League franchises and three National Hockey League teams.

The colleges, too, have a national following with strong support for Stanford, California, UCLA and USC.

The market could generate up to $500 million in tax revenue annually for the state, officials have estimated.

Legalization is already paying off in other states, according to Legal Sports Report.

States with legal sports betting reported $54 billion in bets from June 2018 to May 2021, the site said. That brought $3.2 billion in revenue and $534 million in taxes and revenue sharing with government agencies.

In California, the 18 tribes were able to collect 1.4 million signatures in October, and the secretary of state reported on Thursday that counties have verified more than the required 1 million to qualify the ballot measure.

Grove said the legislation is still not certain to have success, given the absence of online wagering – a primary revenue driver in other states.

“Online betting is a contentious issue, and finding stakeholder consensus will continue to be a difficult task,” he told the Times.

According to the Times’ understanding:

Under the constitutional amendment, sports betting would only be allowed in person at tribal gaming casinos and state-licensed racetracks and only by people 21 and older.

Bets would be allowed on professional, out-of-state college or amateur sport events, but wagering would be prohibited on high school athletic contests as well as any sporting event in which any California college team participates.

Unlike the card clubs, the horse racing industry is on board with this sports betting initiative.

The California Thoroughbred Breeders Association, according to spokeswoman Robyn Black, will bring its support since the bill would help racetracks in the fight for more revenue.

“I think it will help keep jobs in California for brick-and-mortar businesses as opposed to just massively opening up the internet” to sports betting, she said.

Justin Fanslau, a representative for the tracks told the Times: “California's horse racing industry attracts tourism, supports thousands of jobs and preserves important open working space, family farms and small businesses in the state."

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