Lawmakers introduce amendment to legalize sports betting in California

As one state after another embraces legalized sports betting in light of the Supreme Court’s decision last year to strike down a federal law banning it, America’s most populous state has largely avoided the subject altogether.

A bill introduced by two California lawmakers this week aims to at least start that conversation. The bill would give California voters the opportunity to change the state constitution through a ballot referendum, which is a required step to legalize sports betting in the state.

Assemblyman Adam Gray (D-Merced), who introduced the legislation, said in a statement the planned amendment would ideally be on the ballot by November 2020.

“The U.S. Supreme Court has shouldered the burden of bringing legal clarity to the issue of sports wagering and the rights of states under the Constitution,” Gray said. “Now it is the responsibility of the Legislature to determine the most prudent way forward.”

But any effort to legalize sports betting in the state faces an uphill battle just getting past the Legislature. California’s tangled web of gaming stakeholders, from the Native American tribes that operate casinos to cardrooms to horse racing tracks, has long complicated matters when it comes to legislating gambling.

To get on the ballot, a sports betting bill would need a two-thirds vote in the Legislature. Given the considerable lobbying power that gambling stakeholders wield in the state, garnering such support could be a serious challenge.

Tribal gaming interests have been especially reluctant to consider any expansion to gambling, which they argue would infringe on exclusive gaming compacts in the state. Multiple attempts to legalize internet poker in recent years have been squashed amid disputes between tribal groups and cardrooms. A constitutional amendment introduced by Gray in 2017 failed to garner any support. Then, just last summer, a proposed initiative to legalize sports betting failed before a single signature was gathered as tribal groups in the state voiced their strong opposition.

Steve Stallings, chairman of the California Nations Indian Gaming Association (CNIGA), which represents tribal groups in the state, warned that lawmakers “should proceed with caution” with any amendment legalizing sports betting.

State senator Bill Dodd (D-Napa), who introduced a matching sports betting bill in the Senate, acknowledged in a statement Thursday that crafting such legislation would require “a collaborative effort.” Whether gaming interests in the state can actually be convinced to collaborate remains to be seen.

Stallings told the Southern California News Group on Friday that tribal gaming interests in the state would not offer their support for legalized sports betting until “illegal deals” allowing cardrooms in the state to offer casino-style games were revisited. Earlier this week, a federal judge in California dismissed a lawsuit challenging the state on the issue.

Prior to that ruling, Gray told tribal gaming leaders of his plan to put out the sports betting amendment as “a placeholder,” with specifics to be ironed out later as discussions with stakeholders and lawmakers continued. When the bill was announced Thursday, details were scant.

“I think there was a better way to approach these things,” Stallings said.

The Legislature’s approach is sure to be questioned further in the coming months, as informational hearings will be held throughout the state with the intention of addressing concerns, as well as drumming up support.

Across the country, legislative support for sports betting is beginning to catch fire. While California’s efforts have stagnated since last May’s Supreme Court decision, legal sportsbooks have opened in seven states outside of Nevada, while seven more have passed bills that will soon allow sports betting.

None of those states has the population or the sports presence of California, which experts believe could dominate the sports betting market, creating a potential windfall of revenue for the state. Eilers & Krejcik Gaming, a gaming research firm based in Orange County, has projected sports betting could generate more than $2 billion in taxable revenue on an annual basis.

Those opposed to sports betting in the state are less bullish on those predictions.

“It’s oversold,” Stallings said. “Those are very unique markets. While California has a lot of population, it doesn’t have the concentration that New York and New Jersey have. It’ll be interesting, but I don’t think it’ll be a panacea, which, a lot of times, is how these things are presented.”

In New Jersey, wagers over the state’s first year of legalized sports betting exceeded $3 billion, according to ESPN, producing more than $172 million in tax revenue.

A potential windfall of tax revenue is certain to be attractive to lawmakers in California, who have seen tax revenue from gaming interests dry up in recent years. But for Gray, sports betting legislation isn’t so much a matter of revenue as it is protecting consumers from illegal, unregulated betting offshore.

“It is time to shine a light on this multibillion-dollar industry,” Gray said. “We need to crack down on illegal and unregulated online gaming and replace it with a safe and responsible option which includes safeguards against compulsive and underage gambling, money laundering, and fraud. All other gaming activities in California are subject to regulations that ensure the safety of consumers.

“Sports wagering should be treated no differently.”