What To Make Of This Second CA Sports Betting Ballot Initiative

Posted By Matthew Kredell on August 19, 2021 - Last Updated on August 23, 2021

A new California sports betting initiative includes everyone but has the backing of almost no one.

That could change.

The California Sports Wagering and Consumer Protection Act authorizes retail and mobile sports betting for:

  • Cardrooms
  • Tribal casinos
  • Racetracks
  • Professional sports teams

As of its filing on Aug. 12, none of those entities are in support. Even though it’s clearly a cardroom-led bill, it’s not yet a consolidated cardroom effort.

The initiative starts with a few key cardroom backers, a plan in place to utilize support from cities, and the hope to attract more proponents to come on board.

PlayCA spoke with sources representing sportsbook operators, cardrooms, sports leagues, tribes, and racetracks to gain insight into this new initiative.

We’ve found there’s going to be an effort to put a second sports betting measure on the 2022 California ballot. Whether it’s this one or another depends on online sports betting operators.

State of sports betting efforts in California

There’s one sports betting initiative already qualified for the November 2022 election. Backed by a coalition of Native American tribes, it limits sports wagering to in-person only at tribal casinos and horse racetracks.

The restrictive nature of the initiative leaves a lot of parties with interest in sports betting feeling unsatisfied.

Without online wagering, the tribal initiative lacks the biggest driver of sports wagering revenue in states where it is legal. Not only does that frustrate sportsbook operators, but also sports teams and leagues. They make better marketing deals and partnerships with maximum sports betting revenue.

The lack of mobile also means less money for the state and local municipalities. While sports wagering at racetracks is taxed at 10% in the qualified initiative, there’s no guarantee of state income from tribal sports betting. As sovereign entities, tribes would individually work out revenue-sharing arrangements with the state following the initiative’s passage.

In its fiscal impact report, the CA Legislative Analyst’s Office estimated sports betting under the tribal initiative could bring tens of millions of dollars annually to the state. This while New York considers online sports betting proposals projecting as much as $800 million annually to the state.

Cardrooms are the most aggrieved. Not only does the initiative lock them out of sports betting. It also provides a way for tribes to attack cardrooms directly over their player-dealer method of offering blackjack.

Jacob Mejia, spokesman for the tribal coalition backing the qualified initiative, dismissed the newcomer as an effort from one cardroom:

“This measure is not about sports wagering. It is a deceptive ploy funded by a single card room to give Nevada-style casino games to card rooms that have been fined over $8 million for misleading state regulators and violating anti-money laundering laws.”

Details of new CA sports betting proposal

The new initiative allows all stakeholders to participate in California sports wagering while maximizing revenue to state and local municipalities with mobile betting, a higher tax rate, and licensing fees.

Key details include:

  • Authorizing retail and retail/mobile sports betting for horse racetracks, Indian tribes, cardrooms, and professional sports teams from the NFL, NBA, MLB, WNBA, and MLS
  • Allows wagers by those ages 21 and older on professional, collegiate, and amateur sporting events, excluding high school sports
  • Each sports wagering platform pays an initial fee of $5 million plus $1 million every two years for the license
  • Taxes gross gaming revenue at 25%
  • Moneys in the California Sports Wagering Fund get appropriated by the legislature to assist the state in dealing with issues of homelessness, affordable housing, public education, and mental health
  • An additional 1% of GGR up to a collective $10 million goes to funding problem gambling programs
  • Requires the use of official league data for in-play wagers
  • Language validating the way cardrooms offer their games using third-party player-dealers

Who is behind the new CA sports betting initiative?

Three individuals who hold elected positions in California cities filed the initiative. They are:

  • Gardena Mayor Tasha Cerda
  • San Jose City Council Member Raul Peralez
  • Colma Vice Mayor Helen Fisicaro

Proponents describe the submission as coming from a coalition of California cities because the three petitioners are all board members of the California Cities Gaming Authority (CCGA). Inglewood, home to Hollywood Park Casino and off-track betting parlor adjacent to SoFi Stadium (where the Rams and Chargers play), also is part of the CCGA.

California campaign finance records show that the initiative is backed by Cities for Responsible Sports Betting, sponsored by Bumb & Associates, Inc., and affiliated entities.

Bumb & Associates owns Bay 101 Cardroom in San Jose. Bay 101 made an initial $25,000 contribution to the campaign, its only financing to date. Campaign records list the filer’s phone number as the law office of Miller & Olson.

On Aug. 18, campaign contributions of $150,000 each were added by Park West Casinos and Knighted Ventures. Owned by Roy Choi, Knighted Ventures is the biggest operator of the controversial third-party player-dealer games for cardrooms. John Park owns seven cardrooms in the state, including The Bicycle Casino in Los Angeles.

Political consultant Russell Lowery, who calls Tim Bumb a client, serves in an advisory role. Lowery has more than 25 years of political experience, including as chief of staff for several state legislators. He has experience with California sports wagering measures as well. Lowery consulted on the 2018-19 initiative that ended up not going out for signature gathering.

Matt Reilly handles public relations for the initiative.

CA cities could play role in sports betting push

Cerda, who chairs the CCGA, told PlayCA that California and its municipalities need a sports betting initiative on the ballot that will bring more revenue to the state than the tribal option. Backers of the new initiative estimate it could bring the state between $500 million and $750 million annually.

“I think it’s important for voters to have another option,” Cerda said. “Hopefully we’re able to educate voters out there that this is the better one because it gives more money to California. If you can have something that brings you $10 or $100, why not go for the one that gets you $100?”

California cities that depend on cardroom revenue typically take stances that protect their interests. The CCGA advocates in Sacramento to let lawmakers know how cities benefit from the presence of cardrooms.

Despite the name of the campaign, no cities have taken an official position on sports betting or the initiative. Cerda said that, if the initiative moves forward, she expects Gardena and other cities with cardrooms will pass formal resolutions in support of the initiative.

Cerda said she would urge other city councils throughout California to consider doing so as well. Coming out of the pandemic, these cities could use the revenue from sports betting to go toward addressing important issues in homelessness, affordable housing, public education, and mental health.

“I’m leading this initiative because I see the importance this revenue source can be for California cities as a whole,” Cerda said. “I would ask all cities to be in support of this, whether they have a cardroom or not. As more people hear about this initiative and its benefits, people who understand the importance of having these revenues come to our communities will be in favor.”

Where CA sports betting effort goes from here

Making the ballot requires submitting 997,139 valid signatures by April. Signature collection alone would cost $12 million to $15 million.

Sources indicate that the majority of cardrooms currently are more focused on stopping the tribal initiative than doing their own. Running a successful sports betting initiative against the tribal measure could cost $100 million. After facing pandemic closures and restrictions, cardrooms aren’t in the best financial position to fund their own initiative.

While the new initiative creates a possible avenue for sports teams, leagues, and online sportsbook operators to get in on the crown jewel of US sports betting, representatives of each disavowed the initiative in talks with PlayCA.

They aren’t interested in getting involved in the feud between cardrooms and tribes. They’re particularly concerned with the language validating cardroom player-dealer methods. Proponents do have 30 days within filing to change the language.

Everyone considering backing a sports betting initiative agrees that they don’t want there to be three. And so whether this proposal goes forward depends on if online sports betting companies decide to file their own initiative, as they have in Florida.

If they do, the beginnings of this campaign with cardrooms and cities could be applied to that effort.

Whether sportsbook operators choose to go their own way on a sports betting initiative will come to light soon. The California Secretary of State provides a suggested deadline of Aug. 24 on submitting ballot proposals.

That allows for the full 180-day period to circulate the petition for signatures following the AG providing title and summary. However, backers can wait longer if they’re confident that they won’t need the full allotted time to gather signatures.

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Matthew Kredell

Matthew has covered efforts to legalize and regulate online gambling since 2007. His reporting on the legalization of sports betting began in 2010 with an article for Playboy Magazine on how the NFL was pushing US money overseas by fighting the expansion of regulated sports betting. A USC journalism alum, Matt started his career as a sportswriter at the Los Angeles Daily News and has written on a variety of topics for Playboy, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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