Sports Betting screen on a mobile phone screen

A proposal to amend the state constitution in California died in the state legislature, one day before the legislation was to be put up for a pivotal vote. If passed, SCA 6 would have made it legal for California residents to bet legally on sporting events. But the state’s gaming tribes were successful in forcing the bill’s author, Sen. Bill Dodd, to withdraw the bill. Now the question of if and when legal sports betting will ever come to California is, once again, open.

Billions of dollars are already wagered illegally on sports in California. That means that the state receives no revenue from black market sports betting. But the state legislature has been unsuccessful in regulating sports betting in the state thanks to California’s politically powerful tribes which are fighting to maintain their control over California’s gaming industry – including sports betting.

The tribes are adamant that any type sports betting e run exclusively through their casinos. If the tribes are successful they will be able to keep the lucrative online sports betting market out of the state until a way can be found for them to  

California Sports Betting

Legalized sports betting has flourished across the country, and for a while it looked as though California, with the backing of the Major League Baseball, the NFL and the NBA would be the next state to legalize it. The pro-betting forces, however, weren’t betting on the wrath of California’s Indian tribes.

Sports betting supporters were hoping that the passage of the Dodd-Gray bill would result in millions in new tax revenue for the state. However, the state’s wealthy and politically powerful gaming tribes had other ideas. The tribes have a vested interest in controlling as much of California’s gambling industry as possible. They want to see all sports betting facilitated through their casino sites and online wagers excluded from the package. 

Dodd tried to come to a compromise with the tribes as he promoted his bill in the Assembly. In the end, he was forced to remove his bill from a vote. The tribes can now claim the victory in this latest skirmish as they strive to eliminate all competition to their tribal casinos.

Power

Almost two dozen states have legalized sports betting over the last two years, some of which were also at odds with their gaming tribes. But California’s tribes are united and this enables them to keep the state at bay while they promote their interests.

Ken Adams, a gaming industry consultant in Reno said that by withdrawing his bill from consideration, Dodd conceded to “the power the tribes have gained over the last 20 years. Anybody who wants to get a bill through the Legislature is going to have to face that.”

One of the main reasons that many in the state are so anxious to legislate sports betting is that, at present, estimates are that the state is losing hundreds of millions of dollars from illegal black market betting.  “There’s a black market on it,” said Cheryl Schmit of Stand Up for California, an anti-gambling group. “It’s much better if it’s out in the public.”

Californians are already betting on sports through bookies or at offshore websites. The state’s $54 billion deficit, due largely to the coronavirus pandemic, could be mitigated by some of the tax revenues from those bets. Dodd said that his bill, which he co-authored with Assemblyman Adam Gray, could have brought in $500 million in annual revenue for the state.

 “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.

Tribal Opposition

The tribes don’t oppose sports betting per se. But they want it to be available solely through their land-based casino facilities. Anthony Roberts, chairman of the Yocha Dehe Wintun Nation, which owns Cache Creek Casino Resort in Yolo County, said that the objections that his tribe and other tribes have to the Dodd-Gray proposal is that it would have given the tribes’ longtime gaming rivals, the California card rooms, a legal leg on which to rest their contention that their activities are legal.

The tribes have been fighting the card rooms for years, both in court and through the legislature. They want the state to crack down on those card rooms. If online sports betting would have been legalized, the tribes say, the card rooms would have had more leeway to keep operating.

Tribal Proposal

The tribes have their own sports betting proposal that they are trying to get on the November 2022 ballot.  Their proposal is similar to the Dodd-Gray bill. Both would allow sports betting to take place inside tribal casino sites, as well as at some selected horse racetracks (such as the Cal Expo in Sacramento). Additionally, both would allow wagers on college and pro sports (though not on college games involving teams from California).

The major bone of contention involves online betting. Gray and Dodd’s bill would have allowed it. Online betting is where the money is -- in states where online sports betting is legal, such as in New Jersey, up to 85 percent of betting on sports occurs online.

The sports leagues, which fought sports betting up to the Supreme Court, now want to see California – as well as all states -- embrace sports betting.  A letter sent to the California legislature from the NFL called mobile betting “a key component of moving the illegal market into a regulated setting” while a joint letter from Major League Baseball, the NBA, the PGA golf tour and five of California’s professional teams — Oakland A’s, Giants, Dodgers, Warriors and Angels – expressed strong support for the Dodd/Gray proposal.

Special mention of online betting was made. “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 letter read.

The tribes, however, are completely unwilling to consider online sports betting. They say that it could open the door to under-age gambling and would be impossible to regulate. “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. He also says that, due to the fact that online wagering would take place off Indian lands, it might be illegal for the tribes to operate it under the Indian Gaming Regulatory Act. The IGRA is the federal law that governs tribal casinos.

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

Practical Concerns

Nelson Rose, a professor emeritus at Whittier College, legal expert and consultant to the gaming tribes, says that tribal opposition to online gaming is a practical matter for the tribes. At any rate, says Rose, sports betting doesn’t provide a wide profit margin so casino operators would prefer to have customers visit their casinos where they can gamble on-site, which is more profitable. “They don’t want people to stay home and bet on sports events. They want people to come on in and play the slot machines and table games.”

The tribes acknowledge that online sports betting will almost certainly come to California at some point. But they want to delay it as much as possible and control it when it does arrive. Having online betting “dictated to us is unacceptable” said James Siva, chairman of the California Nations Indian Gaming Association and member of the Morongo Band of Mission Indians which owns Morongo Casino Resort near Palm Springs. “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.”

California Indian tribes have a lot invested in the struggle to legislate off-casino gambling. Prior to 2000, they struggled to make a profit from their casinos when tribal casinos were, for the most part, gambling tents and dusty bingo halls.

With the passage of Proposition 1A in 2000, the tribes won the right to open Vegas-type casinos with exclusive rights to operate the highly profitable slot machines. When card rooms opened, the tribes spent $50 million in an effort to prevent the card rooms from operating slot machines. They haven’t yet closed the card rooms but they have been successful in preventing slots in those card rooms.  

California’s tribes have become politically savvy. They donate millions to candidates who support their positions. The tribes’ next step involves promoting their own proposal regarding their sports betting position in California.  Chances are good that they will succeed.

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