Although many states in the union are moving to legalize sports betting, the most populace state is moving sluggishly, if at all in that direction.
Currently, if someone is say, visiting the 360 Sports Bar at Agua Caliente Resort Casino in the Coachella Valley, where myriad TV screens show various forms of sporting events and horse racing, the one thing not available to the avid sports fan is the ability to place a bet. There are, of course, the traditional illegal options open to the bettor, who could also travel to Nevada or other states that have legalized sports book in the last few months since the U.S. Supreme Court lifted the federal ban on it. Since then 11 states have joined Nevada in legalizing it. Thirty other states are considering such legislation.
California is known as a state that leads the country—a trendsetter. It’s not setting trends when it comes to sports betting, however. And that may be because of the Golden State’s somewhat unique gaming landscape that combines 63 tribal casinos, 88 licensed card clubs, and four racetracks.
Its Indian gaming industry accounts for about $7.9 billion, all operating under tribal state gaming compacts that began being adopted in 2000. Federal courts ruled nine years ago against the aggressive tactics of then Governor Schwarzenegger, who tried to make Indian gaming a major source of revenue for the state. They ruled that the state could not negotiate compacts that required payments into the general fund. So the state gets very little Indian gaming revenue, unlike many other states.
Lawmakers, the tribes, cardrooms, racetracks and national gaming businesses see sports betting as a good source of revenue. Since all of those groups see potential profits, they are jockeying for position, without much happening in terms of bills.
According to Adam Candee, managing editor of Legal Sports Report, who was interviewed by the Desert Sun, “Because of the state constitution and the dominance of tribal gaming in California, you have an environment that requires negotiations from a diverse group of stakeholders.”
There was an attempt a year ago to qualify an initiative for the 2020 ballot that would have allowed businesses to offer on-site sports wagering, but it died on the vine when its proponent wasn’t able to get any significant backing. And also because the proponent had hoped that the very act of filing the initiative would force the legislature to act. It didn’t.
The proponent, political consultant Russell Lowery, told the Desert Sun, “The reason for submitting the initiative was to rally the industry around the idea that a legislative solution wasn’t going to happen. Putting a conversation together and getting everyone to the table was kind of the point.” He apparently did the effort on behalf of a client who he declined to name.
For years, Rep. Adam Gray has been the go-to legislator for gaming bills. Several times he has authored sports betting bills and several years ago declared that Golden State residents bet on sports whether it is legal or not. He has lauded the potential revenue from sports betting for the state.
Two years ago he sponsored AB 1573, which would have created a legal framework for sports betting. Last year introduced ACA 18, a proposed amendment to the state constitution to allow sports betting if it became legal nationally. Both bills died.
A year ago, after Supreme Court lifted the federal ban, California Nations Indian Gaming Association Chairman Steve Stallings called for tribes playing a primary role in legalizing sports betting.
Stallings said, “California voters have, on numerous occasions, confirmed the exclusive right of California tribal governments to operate casino-style games. Legalization of sports betting should not become a backdoor way to infringe upon exclusivity.”
The position of the tribes is that they should exclusively control sports book. However the other stakeholders are not going to step away from the table without a fight. The racetracks feel they have a good case, since they have taken legal betting on horse racing since 1933 when the voters amended the constitution to allow it. Satellite betting followed in 1984. By contrast, Indian gaming has been around since 2000 when the voters approved Proposition 1A , which authorized gaming compacts with the tribes, but forbade the state from entering the field.
The last major change came in 2008 when the voters granted tribes triple the number of slot machines in return for paying the state a larger percentage of their profits. However most of this goes into a fund for poorer tribes that have no casinos.
The state of California has collected $918 million from Indian gaming since its inception.
Lowery explained, “It’s not clear who would make money in California on sports betting. With the lack of clarity, it’s tough to organize to get it done.”
Candee speculates that a state as large and diverse as California, with “this many interested parties, it’s just going to take a long time.” He added, “The pressure is on them to take advantage of the opportunity sooner rather than later.” He added that if it takes a long time for sports book to come to California that no one will be surprised.
Historically, governments overpromise when it comes to saying how much money a state will make from a new source of taxation, says Lucy Dadayan, a researcher at the Urban Institute. She told the Desert Sun, “It’s easier to go to voters and say, ‘Hey, do you want to legalize sports betting?’ versus saying ‘Hey, do you want us to raise your income taxes, which means less money in your pocket?’”
That has already happened with revenues that were promised from the legalization of cannabis, she says. What’s more: legalized sports betting could cannibalize existing casino profits.
