Sometimes trying to control the way something happens is a better approach than resisting the activity altogether. That’s the avenue tribal interests in the Golden State appear to be taking with the filing of a proposed California sports betting amendment on Wednesday.
While the tribes that operate California’s 60+ casinos have staunchly opposed various forms of gambling expansion in the past, they seem to have changed their tune in regards to sports betting, according to a Wednesday press release.
Most of their opposition to date has involved expansion that puts gambling authority in the hands of any entities outside of their jurisdiction, while limiting their own. Their latest initiative shows that the tribes aren’t opposed to California legal sports betting, as long as they are the ones in control of it.
Details on the tribes’ California sports betting amendment
On Nov. 13, the tribes detailed their desires for legal sports betting in California. Simply put, it would be a huge win for them if it became law.
Their proposed amendment, called “The California Sports Wagering and Unlawful Gambling Enforcement Act,” would levy a 10% tax on revenue, not handle.
Like elsewhere in California gambling, bettors would have to be at least 21 years of age. Sports betting would be legal at California tribal casinos and some California horse racing venues.
Online/mobile betting would remain a “black market” activity. The proposed framework would also prohibit betting on college games involving California colleges/universities. There are two additional items of particular interest.
The amendment would authorize tribal casinos to adds craps and roulette to their casino gaming offerings. It would also strengthen the ability of the state attorney general’s office to enforce state gaming laws.
The tax rate is reasonable, although it will be worthwhile to monitor if the tax continues to be levied on revenue and not handle going forward. Apart from that detail, this amendment has many perceived flaws.
The two biggest issues with this amendment as written
The complete exclusion of any provision for online/mobile betting is an egregious error. For one, it would limit the ability of the state to collect revenue that it is currently losing out on to illegal, offshore sportsbooks. It would also give legal markets in neighboring states like Oregon that allow online wagering a huge edge over California.
Additionally, the tribal casinos would be losing out themselves. The revenue reports from all over the country show that sportsbook operators who offer online betting see many times the amount of action as those that only take bets in person.
The other glaring issue is the exclusion of betting on games involving in-state colleges/universities. California is home to some of the biggest college sports brands. Once again, keeping that on the black market will mean lost revenue for the state and regulated operators.
It would also mean those teams would not benefit from regulatory protections of game integrity that other teams will receive. As a result, athletes on these California teams will remain at risk of being preyed upon by illegal bookies or those using offshore channels.
There’s more of interest here than just the proposed framework for sports betting, however. The amendment also contains a sly attempt to codify a win for tribal casinos in an ongoing dispute.
Reading between the lines in this proposed amendment
The language about strengthening enforcement of the state’s gaming laws through Private Attorney General Act provisions is like an amendment to fund a construction project tucked into a US Congress bill about clean air regulations. It’s a version of “pork.”
This would be a coup d’etat in the long-running dispute between the tribal casinos and California card rooms. Tribal casinos have objected to card rooms offering blackjack-style games, arguing state law gives the tribal gaming powers the exclusive right to do so.
They have brought lawsuits against the state in the past, but up to this point, those suits have failed. Their greatest ally in the dispute to date has been the California attorney general’s office.
Tribal casinos were some of the heaviest donors to the reelection campaign of current AG Xavier Becerra, who has announced intentions to rein in activity at the California cardrooms. By giving Becerra’s office more power to regulate gambling, the tribes are more likely to get their wishes.
The amendment favors the tribes heavily. That doesn’t mean doomsday for legal mobile betting or the card rooms in California, though. It’s still very early in the process.
Breaking down the road for this California sports betting amendment
The process of amending the state’s constitution is intentionally arduous. It requires a super-majority (2/3 approval) in both chambers of the California legislature.
If that hurdle is cleared, then it would have to pass Gov. Gavin Newsom’s desk as well. Another check on the legislature’s power to amend the state’s constitution is a compulsory referendum.
The state’s registered voters would then have to approve the amendment by a simple majority. Only then would the amendment become part of the California constitution.
This amendment is sure to face scrutiny in the legislature, and will also be competing with another sports betting legalization proposal. An amendment proposed earlier this year would give the state’s legislature the power to legalize and regulate sports betting, with no specific regulation details provided.
Given how strongly the tribes’ proposal favors their interests, it’s unlikely to pass through the Legislature as written. Still, it provides a glimpse into what the tribes are looking for in order to grant their approval of a final framework.
It’s hard to blame the tribes for submitting a potential amendment that so strongly favors their interests, as other stakeholders would likely do the same. It will be interesting to watch how much, if any, of their proposed initiative will survive legislators’ axes.
