A sports betting amendment will soon face its fate in the California Legislature with only a few weeks to go before a crucial deadline. The architects of the legislation are optimistic that voters will have their say this fall.
California sports betting is far from a slam dunk at this point, however. There is much opposition to expanding gambling laws in the state.
The CA sports betting bill fine print
There are companion amendment proposals in both chambers of the CA Legislature. ACA 16 and SCA 6 both contain the following components:
- Brick-and-mortar sportsbooks limited to off-track betting sites, racetracks and tribal casinos.
- Each master licensee would get one skin for online betting.
- Licenses cost $5 million to acquire and have a yearly renewal fee of $1 million.
- 10% tax on retail handle.
- 15% tax for online handle.
- 1% of the tax on handle goes to fund problem gambling programs.
- Earmarks the other 99% of tax revenues for education, public health, public safety, recovery from the COVID-19 pandemic and regulatory costs.
The amendment proposals also have a few items unrelated to legal sportsbooks in CA. The language would forever settle the question of the legality of California cardrooms offering blackjack and other card games.
Tribal casinos in California have long disputed the legality of such games and have filed lawsuits against the state. This amendment would end the dispute but give those casinos leeway to offer craps and roulette to customers.
The process of determining the fate of this proposal should start next week with a Senate committee hearing on Tuesday.
How sports betting in California could become law
The CA Constitution has a more difficult path for amendment proposals than changes to the state’s code of laws. For starters, amending the state’s Constitution requires 60% approval in both legislative chambers.
That’s a major hurdle and not the only one. If it passes the legislature, then it would need a majority of the state’s registered voters to approve it.
Further increasing the challenge is a June 25 deadline to get measures on the ballot for this fall’s elections. That means the backers of this proposal only have about three weeks to get the supermajority in both legislative bodies on board.
Sen. Bill Dodd, the sponsor of the Senate’s amendment, is somewhat optimistic about working out a deal in the allotted time.
“I’m not overconfident about getting this across. It’s going to be some heavy lifting. But I think the moment is right for us. The reality is that we’re trying to find that sweet spot. We’ll find out if we did.”
Stakeholders aren’t entirely happy
There is one major interested party that is glaringly absent from the proposal: major sports leagues.
The proposal would not allow for a retail sportsbook at Dodgers Stadium, for example. It does, however, include a mandate for sportsbooks to use official data for in-game betting.
It’s unclear whether CA sports teams and the leagues they play in will mount any opposition to this proposal. Even if they do, they may not be the fiercest opposition.
Cardroom owners are likely unhappy about not being able to offer sports betting.
In addition, racetracks are likely to express dismay at losing their current monopoly on legal online gambling in CA. Another voice may drown out theirs, however.
California casinos are primed to fight
The biggest pushback is likely to come from tribal casinos. On top of having to share legal sports betting with other entities, they still have strong opposition to officially legalizing cardrooms.
Jacob Mejia, a spokesman for a coalition of 18 California tribes, commented on the legislation in a statement.
“The bill confirms that cardrooms have been operating illegal games for years. Otherwise, this measure would not need to legalize them. The notion of authorizing cardrooms to conduct Nevada-style games is an absolute nonstarter that repeals tribal gaming rights.”
A third element to the tribes’ likely resistance is that they have been working to put their own amendment on the ballot. If they can get enough signatures for the measure by the deadline, it might appear on the ballot this November alongside the legislature’s proposal.
That proposal would give them exclusivity for legal wagering in CA, eliminating the possibility of legal online sports betting. If both potential amendments are on the ballot this year, the one that receives the greater number of votes will take precedent over the other.
Mejia stated that the tribes would file a lawsuit to give them the needed time to get the required 1 million signatures. It appeared the petition was on its way to that number before the pandemic.
The lure of added revenue from sports betting taxes
One of the strongest selling points for state legislators who may be on the fence about this proposal is the badly needed revenue for the state’s budget. The state is facing a shortfall of $50 billion due to the pandemic.
While gambling expansion wouldn’t entirely make up for that deficit, it would help. Dodd estimates it could add $700 million to the state’s treasury.
The state government isn’t the only potential benefactor of the proposal either. Many California cities depend on taxes from cardroom operators for their budgetary needs.
Making their operations legal would be a positive for those city governments. That factor could enlist those cities to support the proposal if it actually makes the November ballot.
Dodd and others need to focus on getting the proposals through the legislature first, however. The time for this drama to play out is short.
