California sports betting legalization put off until at least 2022

June 23, 2020 11:07 AM
  • Howard Stutz, CDC Gaming Reports
June 23, 2020 11:07 AM
  • Howard Stutz, CDC Gaming Reports

California voters will have to wait until 2022 to consider legalizing sports betting.

Story continues below

Northern California State Sen. Bill Dodd on Monday pulled Senate Constitutional Amendment 6 from consideration. The bill would have allowed tribal casinos, card room casinos, and racetracks to offer retail and online sports wagering.

The measure had been scheduled for a hearing Tuesday and would have needed to be passed by both the assembly and the state senate in Sacramento by Thursday to qualify for the November ballot, where a majority vote by California residents could have opened the Golden State to an activity that saw gamblers nationwide wager more than $13 billion legally on sports in 2019.

California State Sen. Bill Dodd

“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,” Dodd said in a statement released by his office.

The Napa Valley Democrat and Central California Assemblyman Adam Gray, who was pushing the bill in the lower house, first introduced the measure in 2018 after the U.S. Supreme Court ruling that allowed states to legalize and regulate sports betting.

“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,” Dodd said. “I will continue to be engaged in the issue as we work toward 2022.”

Two possible ballot questions

The measure had been one of two potential choices California voters could have considered this year in regards to sports betting.

Last November, a coalition of 18 California tribes statewide said they were backing a 2020 ballot referendum that, if passed, would allow sports betting at Indian casinos and licensed racetracks. The proposal didn’t include the state’s 72 cardroom casinos, prohibits wagering on games involving California universities and colleges, and had no provision for mobile sports betting.

The tribal coalition opposed the proposed Amendment 6 because of the inclusion of cardroom casinos and other language, such as mobile sports wagering.

“We appreciate that legislators saw through the smoke and mirrors and stopped SCA 6, the effort to break yet another agreement between California and Native American Tribes and expand Nevada-style games to card rooms,” according to a statement from the Coalition to Authorize Regulated Sports Wagering released by Jacob Mejia, vice president of public and external affairs for the Pechanga Tribe Development Corp.

Jacob Mejia, Pechanga Tribe

Gaming consultant Brendan Bussmann of Global Market Advisors called the decision by lawmakers to pull the legislation, “one of the first voices of reason in the most recent sports betting debate.”

He said legislators made a mistake at the beginning by not including the tribes, which effectively rendered the effort “dead in the water” even if it had reached the voters.

“While it looks like sports betting is dead until the 2022 ballot, all roads lead through the tribes in California, and circumventing them is not an option on any gaming related issues,” Bussmann said. “Some individuals and groups, unfortunately, found that out the hard way this time.”

The tribes’ signature-gathering effort to qualify the measure for this November’s ballot was disrupted by California’s statewide shut down in March due to the coronavirus pandemic. California’s Indian casinos begun to reopen in the past month.

The tribes collected more than 950,000 signatures, but needed an additional 150,000 more to meet the required number to qualify the measure.

“Over 1 million voters have signed our petition to legalize sports wagering at racetracks and tribal casinos, and we respect their preference to authorize sports wagering in a responsible and incremental manner,” the coalition stated.

The tribes are asking a California judge for more time to gather signatures for the ballot question, which will now be pushed into 2022. Small hope persists that the tribal-backed question could still make the 2020 ballot, which will include the presidential election.

A hearing is scheduled for July 2. If the judge rules against the tribes, the coalition would have to restart the process for the 2022 ballot.

Big money

Dodd said the sports betting legalization offered by his legislation would have generated up to $700 million a year in tax revenue for a state currently facing a $54 billion budget deficit.

In addition to the inclusion of cardrooms, mobile sports wagering was a sticking point between the competing bills.

Analysts believe the technology is an important growth factor in the nationwide expansion of sports gambling. Sports betting proponents believe mobile sports wagering works to deter the reliance sports bettors have on illegal offshore and unregulated online gambling sites.

Meanwhile, there has never been a consensus between the tribes, the cardroom casinos – which don’t offer slot machine wagering – and the racetracks. Infighting amongst all factions of California’s gaming interests helped to killed any potential for Internet poker legalization over the past decade.

California is the largest Indian gaming state in the nation, producing more than $8.4 billion in revenue, according to Casino City’s annual Indian Gaming Industry Report.  A study commissioned last year by the cardroom casinos’ trade organization – the California Gaming Association – said the industry has an annual economic impact of $5.6 billion for the state, which includes more 32,000 direct and indirect jobs and $500 million in state and local taxes.

The racetrack industry, however, has suffered from the closures of Hollywood Park, near Los Angeles, and Bay Meadows, just south of San Francisco.

There are now 18 states with legal sports betting operations. Four states – Tennessee, North Carolina, Virginia, Washington – have approved sports betting laws and could launch later this year.

Meanwhile, legislation for legal sports betting is being considered in some form in another 20 states, a number which had, until yesterday, included California.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at Follow @howardstutz on Twitter.