“In order to protect our students and our colleges and universities, sports wagering on high school sports and on California-based college teams must also be strictly prohibited.” —Section 2 (i) of California Initiative 19-0029, to be titled “California Sports Wagering Regulation and Unlawful Gambling Enforcement Act.”
The above language has been lifted from the recent California initiative funded by a number of California tribal governments to give the people of the state the opportunity to vote on allowing sports wagering. The next step in this process is a state-wide election. The fact that this initiative is declaring that betting will not be allowed on California colleges and universities within the state is a detail that will trigger many within the US betting ecosystem.
The wagering restriction on colleges and universities within the state follows a path of interesting logic vis a vis the logic to legalize sports betting in general. The typical argument forwarded by the advocates of sports wagering suggests that making wagering legal moves it away from unsavory operators and places it within a well-regulated and protected environment. Therefore, one would argue, for a state to allow betting on colleges that are out of state implies a desire to create a safe and protected environment for the out-of-state schools–while leaving the campuses within the state subjected to potential nefarious unregulated betting entities… a funny argument, indeed.
In spite of what many say, most advocates for sports betting probably do not lie awake at night worrying about unregulated gambling from a moral perspective. I believe what is more likely, if they do lie awake at night, is that they are busy thinking of ways to make money from legal sports betting and a great way to do that is to limit the supply-side conditions, especially those competitors who are not burdened by regulatory restraints and tax liabilities. Protecting the inhabitants of a state from some evil unregulated book does make for good sound bites, however, and this message is often echoed by many of the advocates for betting. It gives a moral flavor and purpose to the process of making sports wagering convenient to the populace. There is also something of a general rule for those wanting to be involved in the sports betting business where more is considered better; therefore exclusions of betting opportunities are frowned upon.
California would not be the first state to have such an exclusion. In New Jersey, the books within that state are not allowed to accept wagers on colleges or universities within the state. This is really not a terribly big deal in New Jersey for there are not an overwhelming number of betting options in the college space in New Jersey, and the state has basically one-fifth of the number of potential bettors vis a vis California. There are a great many betting options for Californians in the college space and the state has the largest population in the nation, by far. For this reason, many of those who cover and/or have a financial interest in sports betting will be going somewhat apoplectic about this exclusion in the California initiative.
I believe I can possibly provide some clarity and insight as to why this exclusion was in the initiative petition, understanding this is just my guess.
In 2012, I was a commissioner for the California Gambling Control Commission. Moreover, because I had a substantial background in gambling, I was asked to be the consultant to the governor’s office on gambling matters. In addition, the California Senate Government Organization Committee (Senate GO), which was the lead entity at that time in driving gaming legislation, also requested of the governor I be on loan to them as a consultant. In essence, I was in the center of the action whenever the action had to do with gambling in the Golden State.
The Senate GO Committee was chaired by one of my favorite people in California, Senator Roderick Wright. In May 2012, Chairman Wright held a hearing on legalizing sports betting, contingent, of course, on it becoming legal nationally. This was codified in SB1390, and from an expression we owe to the play Hamilton, I was in the room where it happened.
During the hearing, there was an appearance by representatives of two well-known and respected California universities, these being Stanford and the University of California at Berkeley. They came with a clear message that the state should deal around the California colleges and universities in any legalization effort for sports betting. I will note, this testimony sucked a lot of the oxygen out of the room. In response to this request, a provision was made in the bill to eliminate California colleges for betting and it then passed out of committee by a majority vote.
It is important to understand the gravitas of these two universities in California. Stanford currently has on its faculty19 living Nobel laureates, and Cal Berkley is ranked in the top three institutions affiliated with Nobel laureates of all of the universities in the world (with Stanford fourth). The graduates of these two universities occupy some of the highest positions in California public and private life, and beyond. They are also a huge source of pride for the state and are material participants in the political process, especially financially. When these entities speak, politicians listen.
It is also the case that allowing people to bet on these universities may not be on the list of the top 25 things these institutions of higher-learning wish to accomplish during any particular year. It seems a college has a great many other things on its mind that come well before gambling. This may startle some people, but many schools are focused on the educational and research product of the university experience, and this does not include understanding how to calculate the implied probability of a betting line.
It also needs to be appreciated that if a betting scandal does involve a particular campus, it damages the brand of that campus into the future, a reality demonstrated by the University of San Diego. While people might want to argue that coming into the regulated world protects a campus from scandal, I would suggest this is more of a fool’s proclamation than a foolproof proclamation. In the U.S., it appears that many of the sports integrity efforts are more focused on shaping perceptions of integrity than actually providing it. Again, the colleges just may not understand what the upside is for them to be all-in for betting.
In short, many of the colleges and universities in California are unclear how allowing legal sports wagering on their teams enhances the welfare and experience of the students attending the institution. Many of these educational institutions also do not understand how having their student teams involved in sports betting enhances their educational mission. Most colleges prefer to be known for their educational and research achievements, the successes of the students and the ability to innovate and contribute to the world in which they exist. These are the mission critical goals of importance in the academic world, and the football team’s performance against the spread really is not a first-order priority.
It is my opinion that the tribes were alive to some of the issues in the discussion provided above when the language for the initiative petition was crafted. That is to suggest the tribes made a political calculation to eliminate the in-state educational institutions. It probably does not cost them much at the ballot box and it keeps some of the better known in-state colleges from being involved in the campaign. Plus, through time, this type of exclusion can always be relaxed, if it is the desire to the appropriate constituencies as people become more comfortable with betting.
I have had the opportunity to watch much of the tribal casino development in California for a great many years by fact of my residence and my occupation. The tribes are extraordinarily gifted at understanding the politics of the state and the mood and will of the voters. They make few mistakes and they give and take excellent counsel. The decisions they make, and I believe this is particularly true of the group that pushed forward this initiative, are quite wise. In short, when they do things they do them well, and they do them for a reason.
As the Rolling Stones suggest, you can’t always get what you want. What I believe is happening in California is a group of tribal leaders have tried to configure a proposition to present to the public that has a puncher’s chance of navigating one of the most treacherous sports wagering legalization mazes on the planet. The initiative is not a work of perfection from the bettors or operators vantagepoint, and if it were, it probably would not be able to navigate that maze. The prohibition on allowing betting on colleges and universities is a nuance designed to enhance the probability of this initiatives success, and it is one of several such nuances within this initiative.
Knowing what I think I know about California and having been in the belly of that beast for a number of years, if this measure does not pass, I would guess it will usher in a long dry-spell for legal sports wagering in the state. This is the half-a-loaf option and I would suggest it is better than the no loaf at all option.