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Ship Sails Again on California Legal Sports Betting

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The contentious topic of legal sports betting in the state of California is dead for now, according to its sponsor Senator Bill Dodd. It has been a true rollercoaster ride toward legalization in California with intense optimism that something would get done this year mixed in with a pessimism that the state would never get all parties involved to sign off on a satisfactory set of rules. But it was a lack of appropriate consultation with its Indian gaming tribes that dealt the final blow for the pro-betting entities.

Senator Dodd relayed the news of the industry’s demise in a statement that said: “Given the deadlines for getting a measure on the November ballot and the impact of Covid-19 on the public’s ability to weigh in, we were not able to get the bill across the finish line this year. It remains important that we lift this widespread practice out of the shadows to make it safer and to generate money for the people of California. I will continue to be engaged in the issue as we work toward 2022.”

California lawmakers were also facing a time-crunch that added to the idea that legalization in the state was far from a done deal. Any Bill would have needed tribal support and would have had to pass both houses of the California legislature with a two-thirds vote by Thursday in order for a question on the topic to appear on the November ballot.

What is at stake

California would represent the biggest fish in the American legal sports betting tank. With 15 professional teams representing four major sports leagues and with an American-high 40 million people, betting providers and ultimately the state could have greatly benefited from a legal sports betting platform.

It is estimated that legalization would generate $200 million in annual revenue from taxes and licensing right off the bat, and could reach $500 million upon maturity of the industry in the state. With a looming $54 billion budget shortfall in the state due to the coronavirus pandemic, it became obvious just how much that revenue would have aided in mitigating the crippling shortfall.

Tribal input

Although disappointing, the tribal objections to the legislation being proposed in California shouldn’t have come as a shock. All along, the tribes had objected to the mobile component of the Bill which threatened to take away some of the profits of the brick-and-mortar Tribal casinos. Mobile, which has been an enormous revenue generator in other states, was a non-starter for the tribes but something lawmakers saw as a necessity for the platform to move forward.

The California tribes also took issue with cardrooms in the state being offered a small piece of the pie, with casino games specifically. Card rooms’ inclusion in any Bill was never going to be part of a plan that the California tribes signed off on.

“It was a bad bill, written without tribal input, with virtually no time remaining on the clock — it got the finish it deserved,” said tribal lobbyist David Quintana. “It started off as a sucker punch but ended up as a knockout. Hopefully the next round will involve a true dialogue with the tribes.”

In a statement, the California Nations Indian Gaming Association said: “We are heartened to see that SCA 6 is being pulled from the legislative process. While we appreciate that the state was trying to find additional revenues during this time, this bill was simply bad policy. It unjustly rewards the commercial, for-profit gaming industry for their practice of conducting Nevada-style games in flagrant violation of California law. This bill would have also threatened brick-and-mortar establishments by legalizing online gaming, which would reward out-of-state commercial business entities and raise regulatory challenges.”

It will likely be years

California’s inability to get something hammered out in this legislative session will have major implications on the industry’s ability to launch any sort of broad legal sports betting platform for the foreseeable future.

A legal sports betting platform in the state requires a constitutional amendment, meaning that citizens would have to vote on it. Elections happen every two years. That means that the next time that a question of legal sports betting could go before the California voters is in 2022, which would push a potential launch to 2023.

So, it looks like the people of California will be waiting on an ability to wager legally on their favorite team, unless something extra-dramatic happens this week. And who knows? The way things have gone in the state, anything is possible. But as it stands, legalized sports betting in California is unfortunately dead for the foreseeable future.