As states clamor to get in on the sports betting action, California has surprisingly been left out in the cold, despite the largest population in the country.
Maybe not so surprising.
First, there are the tribal casinos, which total around 60. Then there are card rooms, which are at odds with the tribal casinos. Throw in the state lottery and the horse racing industry, and it’s a volatile mixture, which explains why an audience of lawmakers, gaming operators and other industry officials at the 2020 Winter Meeting of the National Council of Legislators from Gaming States (NCLGS) didn’t expect sports gaming to be approved in this year.
”I’m from California, and I can confirm sports betting won’t come in 2020,” said Kyle Kirkland, president of Fresno’s Club One Casino, the state’s first off-site satellite wagering facility.
California has been a primary focus of sports leagues, gambling operators and others since the Supreme Court struck down the ban on betting in May 2018. While some states have failed to enact legislation due to opposition from conservative political and religious groups, California has failed over implementation, thanks in part to conflicting goals.
In 2019, tribal gaming interests began an initiative to take sports betting into their own hands. A coalition filed a ballot measure to amend the state constitution and allow the tribes as well as horse tracks authority to take in-person sports bets and oversee all sports betting in the state.
At the same time, lawmakers introduced an unaffiliated proposal to allow the California state legislature to oversee sports betting. Elected officials held the first hearing on the subject earlier this month.
Both routes face what some say are insurmountable obstacles.
The tribes’ initiative would require nearly 1 million signatures from eligible California voters to even appear on the 2020 ballot, and then would need the majority support of Californians. Any effort would run into opposition from the almost 100 commercial card rooms, which have also sought sports betting authorization. And the current proposal would only allow in-person wagering. In states like New Jersey, online sports betting can make up more than 80 percent of total handle, a factor which could turn off needed stakeholders.
The legislative route wouldn’t require voter signatures, but it would need a two-thirds super majority vote by both the Assembly and Senate, which would be difficult to pass. That path too would be subject to majority voter approval in 2020.
Without a compromise, various gaming factions would try to thwart efforts, depending on which side they’re on.
Still, with a growing, tech-savvy and affluent population, California remains an ideal sports betting demographic. Combined with multiple professional sports teams in all major American sports as well as a rich sporting history, California would be a major target even without some 40 million people. Pressure to do something will only grow.
Expect more hearings in the coming months and more momentum than in recent years to see a proposal come to fruition. California is one of a handful of full-time legislatures, so sports betting should be a consideration point for months to come.
At the same time, the contingent of tribes will continue pushing for support among petitioners as well as the public. While their initiative will see even greater opposition from card and poker rooms, the multi-billion-dollar California Indian gaming market will at least have the financial and organizational structure to push for the ballot measure.
Illinois, a state also with a large population and multiple competing gaming interests, cobbled together a sports betting proposal last year, but that appears more an exception than a future pattern. But Illinois did not face the prospect of a voter referendum.
Florida has also struggled dealing with the dynamics between Native American tribes and the legislature to put together a sports betting deal.
“California and Florida won’t come online in 2020. There’s too much politically in the hopper for both those jurisdictions,” said Dan Reaser, a regulatory attorney with Nevada-based law firm Fennemore Craig. “But, ultimately, if they do come on the market, they will be significant employers.”
Attorney General Xavier Becerra has until January 18 to complete the petition language. Once that is complete, the tribes may begin collecting the 997,139 signatures needed to get the measure on the ballot in November.
The next step for the tribes’ sports betting initiative is for to give it a 100-word circulating title and summary.
Highlights include:
- The 65 tribal casinos in the state would be authorized to offer roulette, dice games and sports betting only if added to their tribal-state compacts
- Sports wagering wouldn’t be authorized until January 1, 2022, giving tribes’ time to work out agreements with the state
As sovereign governments, tribes cannot be taxed directly by the state. They have tribal-state compacts that individually determine payments related to gaming.
Jacob Mejia, vice president of public affairs for Pechanga, told LegalSportsReport.com that his and most of the state’s other leading gaming tribes intend to contribute the same 10 percent of revenue from sports betting into the California Sports Wagering Fund established in the initiative as the racetracks.
Mejia clarified that the initiative couldn’t uniformly establish that all California tribes would contribute 10 percent of sports betting revenue to the fund because it’s up to each tribe to work that out with the state, and some tribes have their own ideas about tribal-state contributions.
There wasn’t too much excitement at the informational hearing on sports betting held January 8 in the Joint Assembly and Senate Governmental Organization committees. Rather than focusing on in-state industry disagreements on how sports betting should be done in California, the hearing looked at how sports betting works in successful markets across the country.
Gaming attorney Daniel Wallach believes the legislature could authorize California sports betting without a constitutional amendment. Citing a 1999 California Supreme Court case, he argued that the ban does not apply to categories of gambling, and particularly not to forms of gambling that weren’t taking place in both Nevada and New Jersey when the constitutional amendment was approved in 1984.
During public comments, prominent Indian gaming lawyer Glenn Feldman, who won a seminal case for tribal gaming in front of the U.S. Supreme Court in 1987, warned the legislature that taking that path wouldn’t be so straightforward.
“I’m not prepared to say that Mr. Wallach is wrong in that opinion, but I can tell you that it is contrary to the conventional wisdom of most lawyers who have been dealing with gaming issues in California,” Feldman said.
