California Sports Betting Initiative Backed By Card Rooms To Begin Signature Gathering

Written By Matthew Kredell on October 19, 2021 - Last Updated on August 22, 2022
Card Room Sports Betting Initiative Can Begin Circulating

It’s looking more and more like there could be three sports betting initiatives on the California ballot in November 2022.

The California Attorney General issued title and summary Monday for the sports betting initiative backed by some card room interests and the cities in which they operate.

Issuance of title and summary for the petition allows the campaign to begin collecting the 997,139 valid signatures needed to put the proposal on the ballot.

However, facing two very well-funded competing California sports betting initiatives from sports betting operators and Native American tribes, it was unclear whether what is called the “cities initiative” would proceed.

Matthew Reilly, spokesman for the campaign, told PlayCA that the initiative will move forward with signature gathering.

“Our intention is to get the signatures and put this thing on the ballot,” Reilly said. “Our guys are committed and we’re moving forward.”

Title and summary for card room California sports betting initiative

Here’s the title and summary as prepared by the California Attorney General:

INITIATIVE CONSTITUTIONAL AMENDMENT. Allows licensed gambling establishments, such as card rooms, to conduct additional games that are played with cards or tiles. Legalizes in-person, online, and mobile sports wagering, which currently is prohibited, for persons 21 years or older. Imposes 15% tax and other fees on sports-wagering revenues; directs revenues first to enforcement and problem-gambling programs, and any remaining funds to public education, homelessness, affordable housing, and mental health programs. Prohibits marketing of sports wagering to persons under 21.

The title and summary will go on the petition circulated to gather signatures. To be confident about having the required valid signatures, the campaign will need to gather a few hundred thousand more than a million signatures by April.

That gives counties enough time to check the signatures prior to the June deadline to make the November 2022 ballot.

Changes made to CA sports betting initiative language

Within 30 days of submitting their California sports betting initiative, the petitioners made a few changes.

The biggest was lowering the sports betting tax rate from 25% to 15%.

The operator initiative has a 10% tax rate, and the tribal initiative taxes sports betting at horse tracks at 10% while creating the possibility that tribes also opt to share sports wagering revenue with the state at the same rate.

Another change directs that at least 40% of sports betting revenue goes toward education. The rest of the sports betting tax revenue goes to local municipalities to assist with homelessness, affordable housing and mental health.

An additional 1%, up to $10 million annually on top of the 15% tax rate, would fund problem gambling programs.

Fiscal analysis for California card room initiative

The Legislative Analyst’s Office in California completed a fiscal impact estimate report for the initiative.

Legislative Analyst Gabriel Petek and Director of Finance Keely Martin Bosler wrote that the sports betting measure could generate state revenues reaching the mid-hundreds of millions annually.

The analysis notes that the exact revenue is hard to predict. It is unclear to what extent tribal sports wagering would be subject to the measure. Tribes have to negotiate their own gaming terms with the state through compacts.

Reilly contends the initiative could generate up to $500 million annually, which would require an overall sports betting market of more than $3 billion.

“They are right that we will generate hundreds of millions of dollars annually, and the most money compared to the other initiatives shall ours pass,” Reilly said. “If people want to address homelessness, education and the other areas we’ve laid out, this initiative is the best way. You’re talking $500 million a year potentially to deal with these issues.”

He argues the initiative will produce more revenue than the other proposals because it’s the only one that doesn’t limit the market. The tribal initiative limits sports betting to in-person at tribal casinos and horse racetracks. The sports betting operator initiative limits mobile wagering to tribes and operators that can afford to pay $100 million upfront.

This measure allows California card rooms, tribes, horse racetracks and sports teams to participate in the sports betting market.

“The cities initiative is the only one that democratizes sports wagering,” Reilly said. “The tribes and fantasy sports operators initiatives give a few people a monopoly. That doesn’t help the consumer. Monopolies aren’t good for consumers, and they aren’t good for innovation and maximizing what’s in the best interest for Californians.”

Battle brewing as CA sports betting initiatives set to clash

In moving forward to put the cities initiative on the ballot, card room interests are willing to put their proposal up against two better-funded competing initiatives.

Operators have already put up $100 million. And it’s expected that tribes won’t be afraid to match that if necessary.

The Cities for Responsible Sports Betting campaign has a mere $450,000 contributed as of this writing from Bay 101 Casino in San Jose, Park West Casinos, and third-party proposition player provider Knighted Ventures. Just collecting signatures could cost upwards of $10 million. Reilly says those already funding the initiative will put up the money necessary to get those signatures.

But he admits the campaign will never be able to compete financially with those from the operators or tribes. And the cities initiative includes language putting it in conflict with those initiatives. If multiple sports wagering initiatives pass, it presents that the one with the most votes prevails. The operator initiative presents itself as being compatible with the tribal initiative, but in conflict with any other mobile wagering measure.

Reilly believes the cities initiative can still be competitive because it offers voters a more inclusive alternative for sports betting.

“We’re excited about our initiative,” Reilly said. “It’s what the other two don’t have that will make this a competitive campaign. When people see the three proposals, they quickly realize that ours does the most for the people of California.”

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