California sports betting legislation needs a traffic cop

December 4, 2019 8:34 AM
  • Howard Stutz, CDC Gaming Reports
December 4, 2019 8:34 AM
  • Howard Stutz, CDC Gaming Reports

We’re learning the road to legal sports betting in California isn’t going to be an easy path.

It’s looking, instead, more like trying to travel on Interstate 15 between Las Vegas and Los Angeles on a busy holiday weekend: a journey fraught with backups, potholes, and delays, leading to a slow, stop-and-go pace.

Last month, 18 tribes California tribes said they were backing a ballot referendum for next year that, if passed, would allow sports betting at Indian casinos and licensed racetracks. The proposal doesn’t include the state’s 72 cardroom casinos, prohibits wagering on games involving California universities and colleges, and has no provision for mobile sports betting.

Sports bettors watch the action at a Las Vegas sportsbook.

On Monday, California lawmakers who have been working on sports betting legislation expressed disappointment in the tribe’s proposal, telling Legal Sports Report “our approach to this should be more holistic.”

Meanwhile, the cardrooms weighed in through their trade organization, calling the initiative “a self-serving effort by some tribal casinos to expand their gaming monopoly.”

Looks like the highway is getting crowded.

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 by the cardroom’s California Gaming Association and released in November 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.

However, the racetrack industry has suffered with the closures of Hollywood Park near Los Angeles and Bay Meadows south of San Francisco. And Southern California’s Santa Anita Racetrack has come under heavy scrutiny in the last year over the deaths of more than three dozen horses while either racing or training at the track.

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 killed any potential for Internet poker legalization over the past decade, and the same battles could sink sports wagering.

California State Senator Bill Dodd, who represents the northern part of the San Francisco Bay Area, told Legal Sports Report that discussions with tribal leaders over a sports betting proposal he is working on with Central California Assemblyman Adam Gray “didn’t go well.” He believes the exclusion of the cardrooms and the lack of mobile sports wagering make the issue problematic.

Hawaiian Gardens Card Room in California

Gaming analysts and sports betting experts have questioned the lack of mobile sports wagering in the California tribal proposal. The technology is a potent and growing factor in the nationwide expansion of sports gambling and works to deter the reliance sports bettors have on illegal offshore and unregulated online gambling sites.

The elimination of mobile in the tribal sports betting proposal is viewed as a compromise between tribes with large resort-style hotel-casinos and tribes with smaller casino-only properties in rural markets. Smaller tribes have expressed concern that the ease of mobile wagering would deter customers from visiting the properties.

The language also keeps technology-driven sports betting players, such as DraftKings and FanDuel, out of California.

“So many people were left out of this initiative,” Dodd said. “We’ve got to consider them, as well as the racetracks and tribes.”

The tribes’ 10-page constitutional amendment has other language that irks the lawmakers and the cardroom community, including a section allowing tribal casinos to offer craps and roulette, an activity currently prohibited.

In a statement provided to CDC Gaming Reports, Kyle Kirkland, general manager of Club One Casino in Fresno and president of the California Gaming Association, said the tribes’ proposal “ignores” any legislative effort to “enact comprehensive and inclusive” sports betting legislation.

“We intend to work with our state and local elected officials toward legislation which benefits all Californians not just a few wealthy tribal casino operators,” Kirkland said.  “We believe Californians want and deserve safe, lawful choices for their gaming activities, not just those alternatives dictated by self-interested tribal operators.”

Dodd expects that, beginning in January, multiple hearings will be held in Sacramento over the legislative measure. He hopes to have that proposal ready for the November ballot by the June deadline.

However, the worst outcome for California is to have competing ballot initiatives to legalize sports betting. That idea would only confuse voters and would be cheered by operators of illegal offshore betting sites, who would continue to prey on sports gamblers in the nation’s most populous state.

That’s a 15-car pileup at rush hour.

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