There is now a “Y” in the pathway to legal sports betting in California after a group of four cities filed a ballot initiative to allow statewide mobile wagering and retail betting at the state’s tribal casinos, horse racetracks, card rooms, and professional sports stadiums. It would also allow for some banked card games at the state’s card rooms, which tribes have long said violates their exclusivity.
The proposal means there could be at least two initiatives on the November 2022 ballot. From a political standpoint, that could create a tough situation for lobbyists and a confusing landscape for voters.
A Request for a Circulating Title and Summary was filed with the California Attorney General’s Office last week. According to the San Joaquin Valley Sun, the cities of Colma, Gardena, Inglewood, and San Jose — all of which have card rooms — are behind the initiative, but a representative from the San Jose mayor’s office says the city is not involved.
Letters requesting the circulating title and summary are dated Aug. 9 and stamped as received Aug. 12. Though the proposal includes virtually every potential venue for sports betting, myriad operators, tribal leaders, and the California Gaming Association say they were not privy to the filing.
Sports Handle contacted the offices of the mayors of the cities backing the proposal, but only San Jose Mayor Sam Liccardo’s office responded, saying it was not a part of the initiative.
If authorized, the initiative would be one of two on the ballot. A consortium of tribes has already qualified an initiative that would allow for retail sports betting only at tribal casinos and four horse racetracks. That initiative was originally proposed for the 2020 ballot, but signature collecting was derailed early last year due to COVID-19 restrictions.
“While the California Gaming Association has not yet taken a position on the newly proposed sports betting initiative, we do strongly oppose the self-serving tribal casino monopoly initiative that will only benefit wealthy tribal casino operators to achieve their goal of a gambling monopoly with no benefits for California residents,” Joe Patterson, executive director of the gaming association, told Sports Handle last week.
And while the latest proposal makes two, there’s a possibility of more to come, if you consider that sports betting giants DraftKings and FanDuel are already running an initiative campaign in Florida. In that state, the Seminole Tribe appears — at least for the time being — to have secured a monopoly on sports betting, which the big rivals are trying to undo.
Timeline for approval
The California cities’ proposal is now open for a 30-day public comment period. The Department of Finance and the Legislative Analyst have 50 days to craft a study estimating costs or revenue to the state from it. Once those tasks are complete, the proposal will be sent to the Secretary to State, and those backing the petition can begin collecting signatures to qualify the proposal for the ballot. According to the Secretary of State website, any initiatives for the November 2022 ballot must be qualified by June 30, 2022.
Those with experience running referendums say it could cost as much as $20 million to gather the 997,139 signatures needed.
Just what #California needs, a second ballot question on #sportsbetting (H/T to @WALLACHLEGAL for first reporting this). Press release says legal sports betting be allowed at tribal casinos, card room casinos, racetracks and through pro sports teams.
— Howard Stutz (@howardstutz) August 12, 2021
Operators and a tribal representative had no comment on the initiative, which requires the use of official league data to settle some bets, a signal that California’s professional sports teams could be behind the proposal. According to the proposal, professional sports teams from “Major League Baseball, National Hockey League, National Basketball Association, National Football League, Women’s National Basketball Association, and Major League Soccer” could be licensed for retail and digital sports betting.
In total, California has 19 professional sports teams that would meet the criteria — five Major League Baseball teams; four NBA teams; three teams each from NFL, NHL, and MLS; and one WNBA team. The teams are spread across the state’s major cities, including one team each in San Diego and Sacramento, and multiple teams in the Los Angeles and San Francisco metro areas and San Jose.
25% tax rate, $5 million application fee
The proposal sets no minimum or maximum number of sports betting sites, either retail or digitally, but it details key issues that include:
- Setting the tax rate for any operator (and this presumably includes tribes) at 25%.
- Setting the legal age at 21.
- Allowing for wagering on professional, college, and Olympic sports.
- Prohibiting wagering on dog racing.
- Setting the application fee at $5 million, with a “bi-annual” licensing fee of $1 million.
- Requiring 1 percent of gross gaming revenue from sports wagering by both commercial operators and tribes to be set aside for problem gambling initiatives.
- Creating the California Sports Wagering Fund, into which most revenue will flow. Money in the fund would be earmarked for “issues of homelessness, affordable housing, public education, and mental health.”
Also of note, the proposal would make it legal for card rooms to offer banked card or tile games, including “Blackjack, 21, and Baccarat.” This would mean that California’s card rooms, which have long been at odds with the state’s tribes, would be able to directly compete with the tribes by offering some casino-style games, rather than player-banked card games.
That final piece will certainly raise the ire of California’s tribes, which contend they have exclusivity to casino-style games. Tribes across the state have argued that card rooms are operating illegally, and they did not include the card rooms in their own ballot initiative.
Why cities are pitching proposal
One unanswered question around the proposal is this: Why did these four cities band together for the proposal? All four cities have at least one card room within their borders, and two of the cities have professional sports teams and venues. San Jose is home to both the NHL Sharks, who play at the SAP Center downtown, and the MLS Earthquakes, who play at PayPal Park near the airport. Inglewood contains one of the NFL’s newest venues, SoFi Stadium, home to the NFL Rams and Chargers.
A second initiative seeking to legalize sports wagering is preparing to seek 1 million signatures to make the 2022 ballot. Who's behind it? California cities. https://t.co/eJhpwKKhYQ
— The San Joaquin Valley Sun (@SJVSun) August 13, 2021
Neither Colma nor Gardena are home to any professional sports stadiums, and the four cities seem to have little in common, other than maybe geographically — Gardena and Inglewood are less than 10 miles apart in Los Angeles and Colma and San Jose are both on the peninsula in the Bay Area.
A new political committee, Cities for Responsible Sports Betting, funded by the Bay 101 card room in San Jose, turned up last week, according to the San Joaquin Valley Sun. Gardena Mayor Tasha Cerda told the newspaper, “This is money that’s sitting out there that’s untapped.”
Should the cities gather enough signatures to get on the ballot, competition between the initiatives promises to be fierce. The ballot language is not yet available, but Californians (of which I am one) in a cash-strapped state will surely be drawn to the 25% tax rate on the latest proposal. Tribes contribute across the state by providing jobs and services in their communities, but should voters approve their initiative, the tribes won’t pay taxes on gaming, though the horse racetracks will pay 10%. It was a savvy move by the cities and their backers to include the tribes in their proposal, as it will make it more difficult for the tribes to lobby against it.
If multiple sports betting initiatives end up on the ballot, it’s unclear if voters will be able to vote for both or be required to choose only one. Most California initiatives require a majority to win.