This article originally appeared in Lineups.
California Sports Betting Update 2022
While California sports betting isn’t legal yet, there’s definitely some hope for the future. A recent proposal for online sports betting needed just over 997,000 signatures and ended up getting an overwhelming 1.6 million, making it likely that an online sports betting bill will be voted on in November. The fact that the sports betting petition had nearly double the amount of signatures needed means there’s clearly a desire to launch legal wagering in the state. Considering the massive population of the state of nearly 40 million people, not to mention the amount of tourists that stop by the Golden State, the sports betting market in the state has massive potential. Keep an eye on this page for future updates on California sports betting legislation, potential sports wagering sites, and projected launches.
The Three Sports Betting Players
Tribes
For years now, Californians have been pushing for sports betting to be legalized in the Golden State. Now, with the November election just around the corner, three different sports betting proposals are fighting for a spot on the ballot. The first initiative is one proposed by the state’s tribes and it is the only one of the three proposals that has already secured a spot on the ballot and is guaranteed to be voted on by Californians in November. This ballot would legalize sports betting at all state tribal casinos and racetracks in California taxed at a 10% rate, however it exclusively prohibits online sports betting in the bill. In fact, spokespeople for the proposal have requested that a ban on online sports betting in the state be implemented for five to ten years following its retail-only legalization. These tribes’ top priority is maintaining their exclusivity of gambling in the state, but disallowing online sports betting was met with opposition as it is central component to the lucrative potential of the California market. So, they submitted a follow up initiative that would allow online sports betting, but only at these tribal casinos.
Sportsbook Operators
The second measure has been dubbed the California Solutions to Homelessness and Mental Heath Support Act and it would create an online-only sports betting market in California, allowing just tribes and the operators to offer online sports betting options to Californians. The main proponents of this coalition are seven sportsbook operators: DraftKings, FanDuel, Penn National Gaming, BetMGM, Bally’s Interactive, Fanatics Betting & Gaming, and WynnBet. These are likely going to be the operators that attain licensing in the state if the bill is approved as they will be the few that can actually afford it. The proposal requires a $100 million licensing fee with a $10 million renewal fee every five years. Tribes on the other hand would pay a $10 million licensing fee, a $1 million renewal fee, and would be able to create their own branded sports betting app if they chose to. Both operators and tribes would be subject to a 10% tax by the state. Horse tracks, race tracks, sports franchises would not eligible to take bets.
In California there are dozens of tribes across the state and far fewer operators. In an effort to include all non-participating tribes in the online betting market, these tribes would get 15% of the tax proceeds collected from online sports betting in California. The other 85% would go to fund the homelessness problem in the state, hence the name of the bill. However this is all conjecture until they receive the required number of signatures to get it on the ballot in November, which they have yet to do.
Card Rooms
Card rooms have been left out of the discussion in terms of sports betting legalization so they are pushing for an initiative that would allow online and retail sports betting at tribal casinos, race tracks, horse tracks, and professional sports venues. Though this is the most inclusive of all initiatives, it has not been popular among tribes and hasn’t generated much traction in getting signatures from Californians.
Background
When the PASPA ruling was overturned back in May of 2018, there were a handful of states that were not expected to pursue legal sports betting for a long time, if at all. California was one of those states. Over a year later, nothing changed in The Golden State. Then, out of nowhere, the wheels started to turn in California in late 2019. California took a major step forward by having its first-ever hearing on legal sports betting.
On January 8th, 2020, the Joint Assembly and Senate Governmental Organization Committees held a meeting in the state capital. The main purpose of the meeting was to get input from industry experts on what exactly a California sports betting market might look like. With the most professional sports teams and the largest population in the country, the California sports betting market would undoubtedly become the biggest in the country and fast.
Chris Grove of the research firm Eilers and Krejcik Gaming said that the market could be worth $2.5 billion per year in California. However, the inclusion of mobile sports betting would be necessary to reach that potential.
Gambling bills in California need a two-thirds supermajority if they are to pass the state legislature since they are taw-related bills. A number that high is nearly impossible to reach unless everyone is on the same page. With state tribes wanting exclusivity to offer legal sports betting, card rooms and racetracks in the state may be at a huge disadvantage.
California has attempted to legalize online gambling in the state multiple times. California has legalized daily fantasy sports, however, DFS has the distinction of not being classified as online betting. Despite some progress on the issue, the attempts to legalize online sports betting hasn’t become reality. Given the state’s notoriously difficult politics, it is unclear when expanded gaming, which will include online gaming, will occur. Since state residents are free to play with offshore casinos, the state is losing large amounts of revenue due to internecine warfare.
Eastern states like New Jersey, Pennsylvania and now New York jumped at the opportunity and are reaping the benefits. Will California finally get the opportunity this year? More states are jumping on the wagon, which is loaded with much-needed revenue generated by sports gambling. Will the pressure of seeing other states going online impact the Tribes and California Legislators? We’ll see.