Could California Become America’s Sports Betting Capital?

SportsbookIt’s been two years since the U.S. Supreme Court has removed legal barriers to sports betting, and in November, Californians may be asked to join 14 other states in allowing legal wagers on sports.

Should this go through, it would create an even more lucrative gambling industry in the state, worth upwards of billions of dollars and effectively creating competition among rival gambling interests in the state.

On Tuesday, 18 of California’s key Indian gaming tribes were given the green light to petition a statewide ballot initiative that would allow sports betting at tribal casinos and horse racing tracks, but not at rival card clubs or the internet.

Sen. Bill Dodd, who chairs the Senate Governmental Organization Committee that oversees gaming, told Legal Sports Report this:

“Frankly, I didn’t expect it, but it really wasn’t a surprise,” Dodd said. “They obviously have firm beliefs on what they see should be happening in this area, and that’s their right. But I represent all the people in the state of California, not just the tribes. And I think our approach to this should be more holistic.”

Senator Dodd says he and Assembly counterpart, Adam Gray, will proceed with holding hearings to fill out ACA 16. The ACA 16 is a bill that is a constitutional amendment to permit sports betting in the nation’s most populous state.

The first sports betting hearing on the ACA 16 was originally scheduled for Nov. 20, 2019 at Staples Center, but it didn’t happen. The hearing was re-scheduled for Jan. 15 in Sacramento.

Tribes Unrelated to Earlier Sports Betting Hearing Delays

Despite the state’s Native American tribes opting to break off and file their own amendment, the earlier hearings were not cancelled on account of this. The biggest cause behind the earlier postponement was the California wildfires, and rescheduling constraints.

While the Native American tribes aren’t responsible for the hearing postponements, they have added extra stress to the discussion, according to Dodd.

Dodd expressed that he and Gray wanted to go into hearings with an empty slate and hear from all sides before putting together a plan for offering sports betting in the state. Now that battle lines have been drawn, that slate is all but clear.

What Legalized Sports Betting in California Could Mean

A legal sports betting market could bring in $2.5 billion in gross revenue annually in California, the largest market in the country, according to Chris Grove, a managing director for Eilers and Krejcik Gambling LLC, a research and consulting firm that has provided estimates to California lawmakers.

The market could generate $250 million to $500 million in tax revenue for the state based on whether the tax rate is 10% or 20%, Gray said.

At a hearing earlier this month, Gray said:f

“It is clear that we are quickly heading in the direction of a well-thought-out, legal sports betting framework here in California. We need to create this framework to ensure regulatory oversight and provide consumer protections to get this long-standing and emerging activity out of the shadows of the illicit or black market.”

Sports Betting Must Become Legal Online, Too

California’s system should also seek to allow betting over the internet and smartphones using state-licensed sites so the legal system can compete and reduce the black market, league officials say.

The MLB has five teams in California. This is the most of any state in the US, so “it’s really important that California get it right, particularly because this will be the largest betting market in the country and it will be a state that other states look to,” Brian Seeley, a senior league vice president and deputy general counsel for Major League Baseball, told lawmakers this month.

Senator Dodd elaborated on the importance of an online sports betting market further:

“It’s clear that if we truly want to take illegal sports betting out of the shadows, there needs to be an online component for those who won’t patronize brick-and-mortar outlets.

Without that, it will remain largely unregulated, continue to pose the risk of fraud and fail to generate funds for education or help with problem gambling.”

Tribal leaders dispute that mobile betting should be allowed and their initiative would only allow betting at racetracks and at casinos, where patrons might be more likely to participate in other gambling activities as well.

“Though sports betting remains illegal in our state, the fact remains that Californians have and will continue to wager billions of dollars every single year on their favorite sport,” Dodd said.