About the most succinct thing you can say about the politics of bringing sports book to California is: It’s complicated.
Despite being the most attractive U.S. market of all for sports betting, with its enormous economy, California could be as much as five years from the first bet being legally placed on a sporting event—and from the state getting its mitts on $100 million a year in tax revenue.
Although Indian gaming has been in place in the Golden State since 2000, many regard its gaming regulatory structure to be out of date.
The number of interests involved, and their inability to create any kind of cooperation for the good of all is at the heart of the problem. There are three major players in the state when it comes to sports betting: the gaming tribes, the racetracks and the cardrooms.
The cardrooms were there first, since 1936. By going to court the cardrooms were able to expand the games that were legal, gradually carving out draw poker, Texas hold’ em and other player-banked games. They were able to play in this field unchallenged for just 12 years, from 1988 until the legalization of tribal gaming at the turn of the millennium. In that year the voters approved Prop. 1A, which amended the state constitution to allow tribes to offers Las Vegas style gaming—and guaranteed them a monopoly on that kind of gaming. In other words, commercial casinos, other than the existing cardrooms, were banned.
When that happened, tribal gaming became the 800-pound political gorilla in the Golden State and the political clout of the cardrooms diminished greatly, but did not disappear entirely. Indian Gaming became one of the most powerful political forces in the state.
Since that time the relationship between the tribes and cardrooms has been tense, at best, and often much more hostile than that. The tribes interpret their rights as giving them a monopoly on anything that could be offered at a commercial casino, including sports betting.
The third stakeholder is the racetracks, of which there are seven remaining in the state, where many more than that once flourished. Although horseracing is on the decline in the state, and several racetracks have been closed because the land was more valuable for other uses, the industry still has political clout.
To see how the politics of sports betting is likely to play out, looking at the politics of online poker is instructive. In that case, a few California tribes over the past ten years were able to put a wrench in the works although most gaming tribes supported it. That remains the status quo today. The cardrooms and racetracks played only a peripheral role in this political dance.
The same man who played a large role in trying to legalize online poker, Rep. Adam Gray, chairman of the Assembly Governmental Organizational Committee, is also the point man on sports betting. Two years ago, when the Supreme Court’s lifting of the ban was only a cloud on the horizon, Gray introduced AB 1573, which would offer a regulatory framework. It went nowhere.
Last year Gray introduced ACA 18, a proposed constitutional amendment that would authorize the legislature to regulate sports betting. It too did not garner support.
Last year a group called Californians for Sports Betting decided to go around the tribes and the legislature and push an initiative for the 2020 ballot that would repeal the tribal monopoly on casino gaming: Article IV, Sec 19 (e) of the California Constitution.
This prompted the tribes to apply pressure to prevent any sports betting legislation from moving last year.
Although many, including the tribes, assumed the card clubs were behind Californians for Sports Betting, they were not, although all of the tribes’ fury at the effort fell on them anyway.
This backlash led to the promoters rewriting their proposal to take out of offending part that would have ended the tribal monopoly. Which stood no chance of surviving a massive campaign by the gaming tribes, anyway. It did, however, contain another clause that irritated some tribes, a provision restricting off-reservation casinos, while authorizing the legislature to regulate sports betting, with a reference to Gray’s bill.
The battle lines will be drawn as to what entities will be allowed to offer the games. The tribes want them and only them to offer sports betting. The racetracks and card clubs want a place at the table. At this point some tribes have formed an alliance with the racetracks to exclude the card clubs.
The tribes are very cross with card clubs, which they believe are largely violating the letter and the sprit of the constitutional amendment that limits them to non-banked games. The clubs are only allowed to collect a fee for each game played on their premises, and hire Third-Party Providers of Proposition Player Services or TPPPS to act as dealers. Tribes consider this a violation and two tribes have gone to court to sue several card clubs—asserting they are running banked games—while other tribes have taken the first steps towards claiming that the state is violating their tribal state gaming compacts by allowing the clubs to continue the practice.
Vincent Oliver, in an article for Legal Sports Report, argues that the tribes are being shortsighted by trying to limit what the card clubs offer because most players who go there do so for the convenience. “Even if some of the table games went away tomorrow, the cardroom customer would likely just go back to playing the traditional player-banked games (i.e. Pai gow tiles, Pai gow poker, etc.) or poker. Yes, cardroom revenues would decrease somewhat but the tribes would get very little of that.”
He adds, “That’s why a gambler who lives in Alhambra, east of downtown Los Angeles, which is maybe 45 minutes from San Manuel, one of the best locals casinos anywhere, would rather drive the 15 minutes to Commerce Casino, even though the amenities are inferior and the cost of gambling is much higher.”
Cardrooms are almost always in metropolitan areas, where tribes by their nature are unable to operate casinos. So, each serves a market that is largely exclusive.
