California Sports Betting

It’s not hard to find a place to gamble in California. The state features almost 100 card rooms and more than 50 tribal California casinos.

However, California is a house divided when it comes to legalized sports betting. At this point, America’s largest state has no definite timeframe for the introduction of wagering on sporting events instate. Proposals continue to surface though, which means interested parties abound.

California residents do have the option to play DFS and enter into sweepstakes-type contests. DraftKings and FanDuel all operate within the state of California.

At the center of this interminable delay are the competing interests of three stakeholders in the Golden State. The three entities in question are:

  • Tribal interests
  • Cardrooms
  • Racetracks

At this point, California would have to pass a constitutional amendment in order to bring sports betting inside its borders. Due to language in a 2000 ballot initiative, the tribal casinos in California have claimed a de jure jurisdiction over all gambling types, including sports betting.

Recent movement on sports betting in California

Democratic Assemblyman Adam Gray of Merced failed to get traction with two previous sports betting proposals. Those included an assembly bill in 2016 and a constitutional amendment in 2017.

During the same time period, an advocacy group called Californians for Sports Betting announced its intention to push for ballot initiatives that would repeal the constitutional language from 2000 that placed so much power in the hands of Native American groups. Needless to say, the tribal interests were not amused. They used their political power to kill almost any mention of sports betting legalization in 2018.

Gray’s failed attempts thus far haven’t deterred him. On June 27, 2019, Gray, along with state Sen. Bill Dodd, introduced into the California Assembly and Senate ACA 16. The amendment would give the CA Legislature the power to authorize and regulate sports betting in the state.

For an amendment to become law in California, first, identical versions need to pass in both the Assembly and Senate by a 2/3 margin. It then must pass the desk of Gov. Gavin Newsom before going onto the ballot, where it needs a simple majority vote. If ACA makes it through both houses, it could arrive on the November 2020 ballot.

California tribes put a horse in the race

On Nov. 13, a coalition of 18 California tribes filed papers with the state attorney general’s office for a sports betting initiative of their own.

“The California Sports Wagering and Unlawful Gambling Enforcement Act” would allow sports wagering in tribal gaming casinos and licensed racetracks. It also includes a proposed 10% tax on gross gaming revenue from sports betting to be used for regulatory costs, public safety, education, and mental health programs.

The amendment would allow wagers on professional, college and some amateur sports. Interestingly, it would prohibit betting on high school contests and games involving California college teams, which will likely be a major point of contention. Another point of contention is the lack of inclusion of mobile or online gambling provisions.

The initiative would also strengthen the power of the California attorney general’s office to regulate gambling. The amendment, if passed as is, would also allow tribal casinos to begin offering roulette and craps.

Like ACA 16, the tribes’ amendment proposal would need to get through the California Legislature before making its way to the 2020 ballot. While it’s unlikely to gain the necessary approval in its current form, the tribal interest seems like a step in the right direction for legalized sports betting.

The largest sports betting market in the country

The AGA estimates Americans wagered $154 billion on sports in 2016. It also claims nearly all of those wagers were illegal.

Broken down by population, that would mean California’s approximately 39.14 million people bet an estimated $18.7 billion on sports in 2016. California is the largest state in America, so it would likely represent the largest sports betting market in the country.

According to Legal Sports Report, that activity would generate first-year revenues of around $100 million. While that figure is a drop in the bucket for California’s $180 billion state budget, it would still be a chunk of new income for a state with budgetary issues.

The wheels appear to be in motion for sports betting to go to a popular vote in 2020. What is less clear is whether it will be the California Legislature or the California tribal interests holding the reigns on regulation.

What would a legal sports betting market look like in California?

Based upon the various attempted proposals in the state, California sports betting would feature:

  • Licensed gaming facilities could take live bets on sports. Online/mobile wagering may be off-limits, depending which body is overseeing regulations.
  • Players wagering would have to be 21 or older as well as inside California’s borders to bet.
  • There would be licensing fees and taxes on revenues for operators.
  • Wagers could be placed on professional, college and some amateur sports. If tribal interests get their way, wagering on games involving California college teams may be prohibited.

The biggest questions surrounding the future California sports betting market include who will be doing the regulating and which facilities will be authorized to accept wagers. With all the competing interests at play, these aren’t simple questions to answer.

Whether either or both of the most recent initiatives make it to the 2020 ballot remains to be seen. The biggest threat to getting sports betting legalized in the Golden State remains dispute over regulatory power and competing stakeholder interests.

The three stakeholder groups have shown no hesitation about contesting progress on bills that look to cut them out of the profits, no matter the cost. The tribes in particular have demonstrated willingness to go to great lengths also to protect their authority over gambling regulation.

Sports betting laws in the United States

Of course, in times past, the proposed sports betting bills had to contend with the Professional and Amateur Sports Protection Act (PASPA). PASPA became law in 1992, making Nevada the only state allowed to offer legal sports betting.

In May of 2018, the US Supreme Court ruled that PASPA was unconstitutional and struck down the federal ban on sports betting. Now that the major hurdle is out of the way, the floodgates for state-regulated sports wagering have opened. California is already late to the party, but could be one of the next to join in.

Daily fantasy sports in California

Daily fantasy sports (DFS) can sometimes serve as an appetizer for sports betting in states. The relatively new industry shares many of the same characteristics. Its two main companies, DraftKings and FanDuel, are having little difficulty expanding their businesses into bona fide sports betting and gambling.

With regard to the Golden State, one half of the California legislature stood firmly behind a daily fantasy sports (DFS) bill in 2016. The bill breezed through committee hearings. It then came up one vote shy of passing unanimously in the California Assembly.

From there, the Senate sat on the bill. It added an amendment in June. The bill headed to committee, where it died. The San Manuel and Morongo bands of Mission Indians that own and operate a pair of Native American casinos in the state voiced opposition.

Even with the legality of DFS in California still an open question, major operators continue doing business. Lawmakers seem disinterested in stopping them either.

This means there is no legal framework, fees, or taxes associated with DFS operations in California. However, these operations still accept California players, albeit by functioning in what amounts to a grey area.

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