Gambling Research Firm: Legal Sports Betting Could Bring $2.5B Annually To California

Posted on January 29, 2020

Although it could be a while before it becomes a reality, there is a reason for optimism regarding legal wagering on sports in the Golden State. A boutique research firm for the gaming industry says that sports betting revenue could be quite lucrative for California.

While that obviously would benefit the state’s coffers, Sacramento isn’t the only party that could cash in. It all depends on the legal framework.

What the study says about sports betting revenue in Cali

Chris Grove, a representative for Eilers & Krejcik Gaming, presented his firm’s findings to a hearing on the subject of sports betting legalization in December. The results are eye-popping.

Grove said he believes legal sports betting could bring about $2.5 billion to California each year. That could result in anywhere between $250 million and $500 million in tax dollars.

While the amount of money that California residents and visitors wager would represent a significant chunk of that $2.5 billion, it’s not the sum total. Legal sportsbooks produce revenue through advertising, creating new jobs and utilizing local services, as well.

There is more than just the diversity of industries affected by the sports betting industry behind the lofty projection, however. The preeminence of sporting ventures and the size of the market also play their parts.

California is the most populous state in the union. If California were its own country, its economy would outrank all but four other nations in the world.

Tourism is a big part of that economy, and one of the draws for the state is an unmatched sports landscape. With four franchises each in MLB and the NBA, two MLS, NFL and NHL squads and a WNBA team, there is high-profile competition at any time of the year.

As promising as the market looks, reaching that $2.5 billion heavily depends on getting the legal framework right.

How a promising sports betting market could sour

A huge part of realizing the full value of legal wagering on sports will be making it as convenient for bettors as possible. There is a threat to that concept right now.

The state’s tribal casinos are working on gathering signatures to put a measure on voters’ ballots later this year. The measure would amend the state’s constitution to allow legal sports betting.

While that might sound good, the devil is in the details. The casinos’ proposal would effectively give them a state-protected “monopoly” on offering legal wagering.

That would exclude not only California card rooms and sports stadiums but online sportsbooks, as well. If the state restricts legal betting to its brick-and-mortar casinos, it will likely only see a small percentage of that projected $2.5 billion in annual revenue.

Because of that, state lawmakers are working on their own amendment proposal. If they get it through the Legislature in time, it could also be on the ballot this November.

But there are ways for even this measure to sour the market. An example of that is requiring bettors to register for their online sportsbook accounts in person. In other markets with that restraint, like Iowa, the action has been diminished.

The potential is promising for California. Making that happen requires wise decisions now. If the state does things right, though, sportsbooks may flock to the Golden State.

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Derek Helling

Derek Helling is a freelance journalist who resides in Kansas City, Mo. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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