Is Betting Legal In California

Legalized sports betting has flourished across the country, and for a while it looked as though California, with the backing of the NFL, NBA and Major League Baseball, would be the next state to embrace it.

It’s a source of surprise for many people that the state of California has not yet legalized sports betting. The state is one of the country’s most popular tourist destinations and its cities are known for being among some of the most laid-back in the world.

• In California, bingo is the only legal gambling activity for charity fund-raising. Organizations operating bingo games must do so in accordance with local ordinances. In general, these ordinances specify limitations on days, locations, and hours of operations of bingo games.
• There is no law preventing legal sports betting sites for California residents from hosting betting lines, and this is the only legal way to bet on sports in the Golden State. Should the 2022 session see sports betting approved, California would reap major benefits from their local sports betting base.
• California also does not allow legal California sportsbooks to operate online within the state. If residents find any bookmaker based in California, they can assume they’re not legal California sports betting sites. For more info on California gambling laws, check out the California Penal Code, Section 330 et seq. There is only one safe.
• They said legal sports betting in California would generate at least $200 million in tax revenue in its first year and eventually raise $500 million to $700 million a year as it grew in popularity.

America’s mighty sports leagues, however, just ran into a force they couldn’t defeat: California’s Indian tribes.

A proposal to amend the state Constitution, and usher in a bold new era of gambling, died in the Legislature on Monday. SCA 6, which would have allowed sports betting via cell phones and computers, was pulled off the table by co-author Sen. Bill Dodd one day before the legislation faced a pivotal committee vote.

The plan, which proponents said would have generated millions in new tax revenue, ran into fierce opposition from the state’s wealthy and politically powerful Native American tribes. The tribes have been pushing a far more limited version of sports betting that excludes online wagers and limits it to their casinos and a few horse racetracks.

Dodd’s announcement was a concession to “the power the tribes have gained over the last 20 years,” said Ken Adams, a gaming industry consultant in Reno. “Anybody who wants to get a bill through the Legislature is going to have to face that.”

Monday’s development leaves California as something of an outlier as sports betting gains momentum elsewhere. Nearly two-dozen states have legalized it the past two years.

The professional sports leagues, after years of warning their games could be corrupted, have made their peace with gambling, and are cutting deals to ensure they benefit financially. Even some organizations that usually oppose gambling believe Californians should be allowed to bet on sports openly.

“There’s a black market on it,” said Cheryl Schmit of the anti-gambling group Stand Up for California. “It’s much better if it’s out in the public.”

There’s also the issue of money. Californians already wager billions of dollars on sports, through offshore websites or illegally through bookies. Elected officials covet the tax revenue that legalized betting could bring to a state that’s had to plug a $54 billion deficit because of the coronavirus.

Dodd, who co-authored the measure with Assemblyman Adam Gray, D-Merced, said their bill could have produced $500 million a year in revenue for the treasury.

“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,” Dodd said in a prepared statement.

The tribes aren’t opposed to sports betting. But they want to keep it confined “to brick-and-mortar facilities,” said Anthony Roberts, chairman of the Yocha Dehe Wintun Nation, which owns Cache Creek Casino Resort in Yolo County.

Roberts and other tribal leaders had other major objections to the Dodd-Gray proposal. The lawmakers’ bill would have put the tribes’ longtime gaming rivals, California’s card rooms, on a more secure legal footing to continue operating. The tribes see the card rooms as illegal and want to give the state greater authority to crack down on them.

The tribes are trying to get their proposal on the November 2022 ballot.

Why tribes oppose online sports betting

Both the Dodd-Gray and tribal proposals would allow sports betting inside tribal casinos and a handful of horse racetracks — including Cal Expo in Sacramento under the legislators’ plan.

Both would allow wagers on professional and college sports, although the tribes would prohibit bets on college games involving teams from California. Tribal officials say their public opinion surveys revealed voters aren’t comfortable with allowing bets on California college teams.

The major split was over online betting.

Dodd and Gray’s proposal would have allowed it. Experts say it’s where the money is. In other states where it’s legal, 85 percent of the action occurs online.

The sports leagues want online wagering, too. The NBA, Major League Baseball, the PGA golf tour and five of California’s professional teams — the Giants, A’s, Warriors, Dodgers and Angels — sent a June 1 letter supporting Dodd and Gray’s proposal and insisting that online betting be included.

“To ensure that consumers move away from the illegal market that exists today, any legal sports betting framework must include options for Californians to wager online and on mobile devices,” the group wrote. A separate letter from the NFL called mobile betting “a key component of moving the illegal market into a regulated setting.”

The tribes, however, say online sports betting would be nearly impossible to regulate — and could open the door to under-age gambling.

“There’s no way to know who’s using that hand-held device. It could be a child. That’s our biggest worry,” said Roberts of the Yocha Dehe tribe.

Tribal officials say online wagering — because it would take place off Indian lands — might be illegal under the Indian Gaming Regulatory Act, or IGRA, the federal law governing tribal casinos.

“The leagues, the industry, everybody’s pushing sports betting, but the tribes are still handicapped by IGRA,” said Victor Rocha, a consultant to casino tribes.

I. Nelson Rose, a consultant and legal expert on Indian gaming, said the tribes’ opposition is also rooted in practical business concerns.

Sports betting simply isn’t very profitable, no matter where the wagering occurs, Rose said. Tribes would rather keep their customers in their casinos dropping money into the slot machines.

“They don’t want people to stay home and bet on sports events,” said Rose, a professor emeritus at Whittier College. “They want people to come on in and play the slot machines and table games.”

The tribes have poured $8.5 million into their ballot measure, which would limit sports betting to casinos and racetracks.

Dodd offered a compromise that would have phased in online betting over several years. But the tribes weren’t persuaded. They acknowledge that online sports betting is probably coming eventually to California — but want to control when and how it arrives.

Having online betting “dictated to us is unacceptable,” James Siva, chairman of the California Nations Indian Gaming Association, said during a recent webinar on tribal gaming issues.

“Whether online gaming is three years down the line, five years down the line, if it’s 10 years down the line, or if it’s not even in the conversation ... it needs to be a tribal decision.” Siva’s tribe, the Morongo Band of Mission Indians, owns Morongo Casino Resort near Palm Springs.

Court opens door to sports betting

For decades, Nevada casinos held a monopoly on legal sports betting in the United States. A 1992 federal law outlawed the practice, although Nevada’s sports books, a fixture since the late 1940s, were grandfathered in, along with limited forms of sports betting offered in Oregon, Montana and Delaware.

All that changed when New Jersey legalized sports betting and challenged the constitutionality of the 1992 law. In 2018, the U.S. Supreme Court sided with New Jersey. Soon there was a flurry of states joining New Jersey and enacting their own sports betting laws.

Currently, 19 states allow it in one form or another. Three other states plus Washington, D.C., have legalized sports betting but the laws haven’t gone into effect yet, according to gambling website SportsHandle.com.

After decades of resistance to the issue, sports leagues have begun signing marketing deals and other partnerships with gambling interests. Barely two months after the Supreme Court ruled, the NBA agreed to a dealing making MGM casinos the “official gaming partner” of the NBA and the WNBA. Major League Baseball made a similar deal with MGM a few months later.

The economic shutdown created by the COVID-19 pandemic creates an additional impetus for legalized sports betting. States “are desperate for money to balance their budgets,” Rose said.

However, sports betting might not be the revenue goldmine that state officials imagine.

For one thing, the tribes wouldn’t be obligated to contribute anything to the state’s coffers; any contributions would be subject to negotiation with the governor.

Is Super Bowl Betting Legal In California

California’s tribal casinos, an $8 billion-a-year industry in California, are not subject to state income tax. They once contributed as much as $330 million a year to the general fund through compacts negotiated with the governor, but that amount has dwindled considerably after a judge ruled those payments constituted an illegal tax. They do provide about $170 million a year to a pair of state-run funds that help non-gaming tribes and operate programs for problem gamblers.

The racetracks’ winnings from sports gambling would be subject to taxation. But Richard Auxier, who’s studied sports betting for the Tax Policy Center and Urban Institute, said the state’s annual tax revenue would likely fall way short of the $500 million estimated by Dodd.

“It’s definitely not a windfall,” he said.

Is Online Horse Betting Legal In California

And without online wagering, the state’s take would be even smaller.

“You’ve got to go online because that’s where the money is,” he said.

California tribes wield political clout

For years, California Indian tribes struggled to make a living off gambling. The laws were unclear, and the tribes were reduced to dusty bingo halls and gambling tents that did little to lift them out of poverty.

Then came Proposition 1A, in 2000, a landmark event in the history of California gambling. With a resounding 65 percent of the vote, they won the right to open full-fledged, Vegas-style casinos.

The proposition also gave them a statewide exclusive right to operate slot machines, a casino’s most profitable asset. Four years later, when their exclusivity was challenged at the ballot box, they spent millions and crushed the effort.

Proposition 68 was born out of the state’s budget deficit. It said that unless the tribes surrendered 25 percent of their winnings to the state, racetracks and card rooms could operate slot machines.

Is Betting Illegal In California

The tribes and their allies spent more than $50 million fighting Proposition 68, about twice as much as their opponents. The initiative gained just 16 percent of the vote.

The tribes don’t always win. That same year, they failed to secure passage of Proposition 70, which would have given them the right to operate unlimited numbers of slot machines.

Still, tribal casinos in California have become a major force in California politics. They’ve donated millions to political candidates over the years.

“There’s a lot of money and there’s a lot of power there,” Dodd said last week, when he was still trying to broker a compromise with the tribes. “There’s a lot of sway with lawmakers, we get that.” The senator has received campaign contributions totaling $42,000 from Indian tribes since January 2019.

One influential tribe has stayed on the sidelines during this fight: the United Auburn Indian Community, owner of the ultra-successful Thunder Valley Casino near Lincoln, and no stranger to political skirmishes. The tribe’s spokesman, Doug Elmets, declined comment.

Just about every other big casino tribe joined in the effort to qualify the tribes’ proposal for the ballot, however. Yocha Dehe led the way with a $2 million contribution, followed by $1.5 million each from the tribal owners of the Graton Casino in Rohnert Park, the San Manuel Casino near San Bernardino and the Pechanga Casino in Temecula.

Until the coronavirus stay-at-home order was issued in March, the tribal coalition had spent $7 million collecting signatures and believed it was well on its way toward qualifying its proposal for the 2022 ballot. Although it still has until July 20 under state law to circulate petitions, it’s suing the state and demanding more time.

Tribes vs. California card rooms

Is Online Betting Legal In California

Compared to tribal casinos, California’s approximately 70 card rooms are small players. Their annual revenue is barely 10 percent of what the tribes pull in. They wouldn’t be participants in legalized sports betting.

But their future has become the focus of an intriguing subplot in the fight over sports gambling.

It has to do with the somewhat arcane rules governing their operations.

Card rooms technically aren’t allowed to take bets. They have to contract with third-party companies whose employees act as “the bank” and take the bets. Those employees pay the card room a small fee at the beginning of every hand, depending on how much is wagered — the only money card rooms make from gambling. What’s more, the bank role has to be periodically offered around the table, to each customer.

For years Indian tribes have complained to state officials that most card rooms routinely ignore the regulations, particularly the requirement about offering the bank role around the table. They say the card rooms’ operations represent an intrusion on the tribes’ exclusive legal right to offer Vegas-style gambling in California.

Now they want to do something about that. The tribes’ ballot initiative would allow the state to close down anyone violating the rules — up to 30 days for repeat offenders — and give anyone the right to sue the card rooms for violations if the state won’t.

Dodd’s proposal would have fixed a gray area in the law to make clear that the card rooms’ games are legal. At the same time, last week he offered the tribes an olive branch by proposing stricter rules for the card rooms — for instance, requiring customers to accept the “bank” role periodically instead of merely having it offered to them.

The tribes rejected Dodd’s compromise.

For their part, card rooms have raised $7 million to fight the tribes’ proposal, which they view as an attempt to severely damage their viability.

“The reality is that our games are legal,” said Kyle Kirkland, owner of Club One Casino in Fresno and president of the California Gaming Association, which lobbies for the card rooms.

But he acknowledged that card rooms may be facing a difficult fight.

“Certainly the tribes are organized and influential and have talented people working for them,” he said. “I would hate to think it’s only whoever has the most money gets to dictate the rules.”

———

Is Online Casino Legal In California

©2020 The Sacramento Bee (Sacramento, Calif.)

Is Betting Legal In California

Visit The Sacramento Bee (Sacramento, Calif.) at www.sacbee.com

Is Online Sports Betting Legal In California

Distributed by Tribune Content Agency, LLC.