A Golden State Opportunity: Will California See Online Sportsbooks Soon?
Last weekend, California hosted America’s biggest annual sporting event. But in the year when mobile betting surged into the mainstream, the Super Bowl state remained stuck in its protest against online sportsbooks. Analysts have predicted that mobile betting could have generated for California a handle of between $300 and $400 million, yielding for the economy $2.5 million in taxes from the Super Bowl alone. So why is the Golden State still against online sportsbook legislation?
Current Online Gambling Legislation in California
Sports betting, whether online or in physical locations, is not yet legal in California. Over 30 states now permit retail sports betting, and the number of licenses granted to tribal casinos for online sports gambling is growing.
Not all tribes are on board, however. Three Californian tribes – the San Manuel Band of Mission Indians, the Rincon Band of Luisueño Indians, and the Wilton Rancheria – have formed the Californians for Tribal Sovereignty and Safe Gaming committee. This week, the committee announced a campaign with a $100 million budget to block the approval of online sportsbook operators in the state.
Why Operators Want Access to California Casinos
In most states, sportsbooks need to partner with a land-based gambling operator. In 2021, seven of the major US sportsbooks launched an initiative to approve mobile sports betting in California.
Titled the California Solutions to Homelessness and Mental Health Support Act, the initiative promises to give 85% of all taxed online revenue back to the state in an effort to fight homelessness and increase mental health services. The remaining 15% is to be distributed amongst the tribes that don’t own casinos.
California has the highest number of tribal-operated casinos. It also generates 25% of the total tribal gaming revenue, more than any other US state. But PlayUSA analyst Eric Ramsey estimates that as a result of its strict sports betting rules, the Super Bowl state missed out on around $2.5 million in taxes and around $25 million in GGR.
New York, on the other hand, legalized sportsbooks in January this year and has already become one of the leading sports betting states in the US. Since California has twice the population of the Empire State, it’s no surprise that operators across the country are keen to get the ball rolling in the Golden State.
Why the CTSSGC Are Pushing Back
Californian tribes don’t want to see money taken from the state by commercial operators. Native American casinos are obliged to invest profits in initiatives that will benefit their tribes, such as education, welfare, and government schemes. The committee wants to ensure that the revenue generated by Californian sportsbooks will return to the tribes, and not increase the wealth of commercial operators.
Along with a large number of other Californian tribes, the committee also opposes online sports betting because of its potentially harmful effects on players. As retail casinos are much harder to access for underage players, the tribes believe that online casinos could encourage illegal gambling and promote higher levels of gambling addiction in the state.
Do Other US Tribes Support Online Sportsbooks?
Aside from the sportsbook-backed initiative to legalize online sports betting in California, there is also a tribe-backed initiative to legalize retail sports betting in land-based tribal casinos and horse tracks. Eighteen tribes from across the US supported and filed the ballot, which excludes mobile gaming (and therefore excludes commercial sportsbook operators).
Over in the east, Maine governor Janet Mills has expressed her support for new legislation which would grant the state’s tribes exclusive access to digital wagering licenses. Similar to the tribal-backed initiative, this would see commercial sportsbooks excluded from operating in Maine. However, full mobile licensing would then be given to a specific number of tribes.
In some states where online sportsbook licenses are being trialed, tribes are already looking to expand. Ten tribes so far have been awarded licenses in Arizona, but Senator Sally Ann Gonzalves has introduced legislation to license the remaining twelve tribes that were left out.
What are the Key Sportsbook Initiatives?
There are currently four key initiatives focusing on the legalization of online sportsbooks in California.
The first is the California Sports Wagering Regulation and Unlawful Gambling Enforcement Act. Similar to the UIGEA, this act would prohibit unlawful internet sports wagering. The tribal-backed measure would legalize retail-only sports betting in tribal casinos and racetracks, and online gaming would not be made legal. The Californians for Tribal Sovereignty and Safe Gaming committee seeks the same outcome from their $100 million campaign.
The second initiative is the California Solutions to Homelessness and Mental Health Support Act. This operator-backed measure would legalize online sports wagering for commercial sportsbooks. Operators would need to partner with a tribal casino in order to launch their mobile sportsbooks. This initiative is supported by the licensed tribes that have already formed partnerships with major sportsbook operators.
The third initiative is one backed by cities with card-room casinos, titled the California Solutions to Homelessness, Public Education Funding, Affordable Housing and Reduction of Problem Gambling Act. It would allow tribes, card rooms, horse tracks, and professional sports teams to offer retail and online betting to customers over the age of 21. A 15% tax on revenue would be used to fund education, housing, and gambling addiction recovery.
The Age-Verified Tribal Online and In-Person Sports Wagering Regulatory Act is the fourth and most recent initiative, and was backed this week by the California Nations Indian Gaming Association (CNIGA). This measure would permit retail and online sportsbooks for tribes only.
CNIGA emphasized that this endorsement does not mean they oppose the California Sports Wagering Regulation and Unlawful Gambling Enforcement Act. A statement released by a CNIGA official claims that while not all tribes are agreed on the direction of online sportsbooks, they are “united in their fierce opposition” to commercial sportsbook licenses in California.
What Does the Future Look Like for Californian Sportsbooks?
The chances of sportsbooks appearing in the near future seemed slim at first. However, the tides are turning at a rapid rate. In October 2021, CNIGA denounced the legalization of any Californian sports betting as a threat to tribal gaming. Now only a few months later, they have expressed their support for the legalization of both retail and online sportsbooks for Californian tribes.
Similarly, this year’s Super Bowl has demonstrated just how quickly attitudes towards sportsbooks can change. Until recent years, the NFL was opposed to sports betting. But after NBA commissioner Adam Silver expressed his support for legal betting, and the eventual striking of PASPA in 2018, the NFL changed its tune and hasn’t looked back since. New York Times reporter David Chen estimates that this year alone, partnerships with sportsbooks and casinos generated nearly $2 billion in sponsorship revenue.
Although the state has experienced some gridlock, the future of sportsbooks in California looks hopeful. In November, Golden State voters will decide whether or not to legalize retail or online sportsbooks, or both. Tribal opposition seems to have shifted from sports betting itself to online sportsbooks. So, even if we don’t see online sports betting in the near future, we’re hopeful that California will see retail sportsbooks legalized by the end of 2022.