As states across the country consider whether or not to legalize sports betting, the three most populous seem to have taken themselves out of the running, according to an Associated Press study. California, Florida and Texas have a combined population of nearly 90 million, about 30 percent of the U.S. population as a whole — and their residents have to go out of state or more likely, offshore via the web or to an illegal bookmaker to place a sports bet.
That likely won’t change any time soon, and losing that opportunity is no small thing for potential operators.
“These states are the brass rings given the size of the populations and the potential opportunity,” said Sara Slane, Senior Vice President of Public Affairs for the American Gaming Association, told the AP.
33 pro teams call California, Florida or Texas home
Beyond that, 33 teams from the four major professional sports teams call these three states home: 16 in California, nine in Florida and eight in Texas. In fact, California alone is home one-sixth of all MLB teams and one-eighth of all NBA teams, including the Golden State Warriors dynasty.
Yet none of the three states has made any significant move toward legalizing sports betting since the Supreme Court struck down the Professional and Amateur Sports Protection Act in May. The question is: Why?
The broad brush answers are fairly simple. They all have powerful tribal interests to contend with. And, as has become evident in the last few months, negotiating with tribes across the country – even if states are willing to give them a monopoly on sports betting – has not been easy. In Arizona and Minnesota, both states where bills have been filed that would give the local tribes exclusivity, the tribes themselves have been pushing back. The reasons are as varied as the tribes themselves, a key reason why dealing with Indian gaming interests is tricky. Different tribes have different end games, yet in many cases, they must negotiate as a group.
It’s also proving tougher to legalize sports betting in more populous states. Smaller states are proving more nimble and have fewer and/or less aggressive special interests to deal with. It also seems that in the smaller states, governors and state lawmakers had a consensus long before bills were brought to a vote, meaning that the bigger key points — taxation, regulatory body, whether or not offer mobile — had been hammered out well in advance.
But there are unique reasons in each state for stalled or lack of legislation. Below is a look at where each state stands.
As early as 2016, California Assemblyman Adam Gray (D-District 21) introduced a sports betting bill that would have created a framework for sports betting, but it did not even got past the introduction stage. In 2017, Gray tried another tack, offering ACA 18, a constitutional amendment that would have had to go on the 2020 ballot. The possibility died last week, when the deadline to get an initiative on the ballot expired.
California has a gigantic tribal gaming presence, but the state derives very little revenue from tribal gaming. According to a Los Angeles Times story, the state at one time expected $330 million annually in tribal-gaming revenue, but as recently as 2016, received only $3.6 million. In addition, the state’s tribal compacts will expire next year, and it’s unclear what direction new Governor Gavin Newsom – or the tribes, for that matter – will take.
On balance, it’s a good bet that sports betting won’t be a key issue in California at least until the tribal compacts are renegotiated, and after that, a state lawmaker must rally support for a sports betting initiative and then contend with finding a happy middle ground between the tribes, local card rooms, horse tracks and any other gambling entities in the state. But consider:
Yes. What leverage do the tribes have in California if they contribute little the state? I’d wait till the compact expires and open bids for 5 companies to operate books. The bid amounts would be ginormous to access a state of that size. Even with their budget surplus $$ is $$.
— Steve Brubaker (@SteveBrubaker) March 5, 2019
For now, though, the Golden State is feeling richer than it has in many years, and it’s a better bet that the California’s bullet “train to nowhere” (set to connect rural Bakersfield to Merced) actually gets built.
Any gambling power in Florida lies with the Seminole Indian tribe, which offers casino-style gambling at six locations. The Sunshine State’s legislative session opens March 5, and sports betting likely won’t be a key topic of discussion, though at least one lawmaker has plans to introduce a comprehensive gaming bill, that would include sports betting.
At stake, though, is hundreds of millions of dollars in revenue that the Seminole tribe currently pays the state. According to FloridaPolitics.com, the tribe has paid Florida $200 million a year in recent years, with the expectation that that number with reach $380 million in the coming fiscal year. Florida lawmakers aren’t likely to cross the Seminoles by legalizing sports betting across the board, which could nullify the current pacts.
For a state that has jai-lai, pari-mutuel betting (both horses and dogs), and casino-style gaming, the idea that sports betting would be a hard sell seems bizarre. But then, the Seminoles were powerful enough to lobby enough votes to pass Amendment 3 last fall with over 72 percent in favor. The bill takes the power to expand gaming in the state out of lawmakers’ hands and put it into the public’s. That move ultimately sets the Seminoles – or another powerful lobby – up to direct expansion however they see fit.
While there is limited Indian gaming in Texas, it’s not the tribes that will ultimately put the kibosh on sports betting in the Lone Star State. It’s the conservatives. Just last week, the state was in court asking a West Texas tribe to end gaming at its casino.
There are several sports betting bills circulating in the Texas state legislature, including one that would legalize sports betting and lays out a framework, and one that calls for a constitutional amendment to legalize sports betting. It appears that a constitutional amendment would be necessary, meaning that the timeline for legalization will stretch into years, should it ever become a real possibility.
But more to the point, politically speaking, Texas is Bible Belt state, and politicians view the perceived “evils of gambling” as taxes on the poor, opportunities for organized crime to open up shop and the like. And Texans don’t want any part of that.
“It’d make a sales tax blush with its regressivity,” conservative lobbyist Rob Kohler told TV station KXAN last fall when asked about gambling expansion. “So, is it smart for us to fund our government with the folks that we’re giving money to help? No.”
Of the three states, in its current political climate, Texas is the least likely to legalize sports gambling because for politicians there, a gaming expansion of any kind is not just a financial issue, but a social issue that cuts to the core of the fabric of their beliefs.