The debate about California sports betting is typically seen as a showdown between 63 tribes who run the state’s 66 Indian casinos, and their longtime rivals, 72 commercial card rooms.
But racetracks also have a stake in the decision, which is heading for a vote next year. And the tracks are hardly neutral.
The current initiative would legalize sports betting at brick-and-mortar tribal casinos and also allow tribes to add Las Vegas-style games such as roulette and craps. In addition, it would authorize four racetracks in Alameda, Los Angeles, Orange and San Diego counties to offer retail sports betting but no mobile sportsbooks.
Like the tribes, the racetracks prefer to keep betting offline for now.
Californians Have a Say
In May 27, the Coalition to Authorize Regulated Sports Wagering qualified more than 1 million signatures from registered voters who support the measure. Only 997,139 names were needed to put the initiative over the top; the measure will now go to a referendum in November 2022.
Although closely allied with the group of tribes that led the campaign and while following their lead, the tracks have different interests at stake. Their industry is not confined to the racetracks themselves, but also includes breeders of thoroughbred horses, jockeys, service providers and hundreds and thousands of people who work in racing-related jobs.
“For us—the thoroughbred breeders and most of the racing industry—we’re very supportive of the tribal initiative,” Robyn Black, lobbyist for the California Thoroughbred Breeders Association (CTBA) told GGB News. “We’ve been working with the tribes for a number of years, ever since the 2018 Supreme Court decision [that ended the federal ban on sports betting.] We knew it was going to someday become a reality, and we’ve been working together to get it right.”
Reasons for Track Support
In many states, proposals to add sports betting to parimutuels is seen as a way to rescue an ailing racetrack industry. Black says that’s not really the case for California’s four functioning racetracks.
“Del Mar Racetrack is doing great. Most of the racetracks included in the proposed initiative are doing well. The racing handle has been going up. We’ve been taking wagers for a very long time in California and we actually take wagers online—so our folks are doing great.”
Nevertheless, the CTBA sees two important reasons to create a legal sports betting industry. “There are two pieces,” said Black. “There’s the sports wagering at the brick-and-mortar casinos and racetracks, which we think protects California jobs and will increase foot traffic to them. The other is protecting consumers.”
That echoes the chief argument for legal sports betting in the U.S.: the massive, remote, untaxed and unregulated betting industry. According to the American Gaming Association, when sports betting was illegal outside Nevada, Americans still bet $150 billion on sports with illegal bookies.
“There was no consumer protection, and (in California) folks right now have to go offshore illegal sites,” said Black. “There’s no protection for underage folks and problem gamblers. There is no benefit to the state. But there is a benefit—we hope—from the measure to create brick-and-mortar sportsbooks.” For one thing, it will create new jobs. “But equally important, we see protections for consumers that simply don’t exist today.”
The amendment to California’s constitution specifically does not authorize online sports betting—and that’s a plus, from both the tribes’ and the racetracks’ perspective. “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,” said Black. And that, of course, means more money for the racetracks and the breeders. However, mobile sports betting may be inevitable down the line.
Next Steps
With a $54 billion budget deficit—the worst in its history—California is motivated to open a new revenue stream. And though sports betting is a low-margin industry, the Golden State, with a nation-leading population of almost 40 million, could be the biggest untapped market of all.
Before Californians can join them, voters must OK a constitutional amendment on the 2022 ballot. If that happens and a sports betting bill is pushed through, fans could start rooting for (and betting on) their favorite home teams by the following year.
Meanwhile, Black said the horseracing industry won’t be involved much in electioneering efforts. Some political observers say spending on both sides of the measure may be comparable to that in 2008, when commercial interests spent $154 million in a campaign to oppose expanded Indian gaming, and tribes spent $115 million in support of it. The card clubs lost that battle.
“The tribes have done a phenomenal job so far,” said Black. “The important thing to recognize is that the tribes are incredibly astute and we feel they have written a very solid initiative. We will take our cues from them but it is their initiative and they know what they are doing. We are here to support the initiative in any way we can.”
