California tribal representatives will soon be in front of a grocery store near you, lobbying for signatures to get a sports wagering referendum on the November 2020 ballot. On Tuesday, the state published a title and name for the proposed ballot initiative put forth by 18 tribes in the state, and those tribes can now begin collecting the nearly 1 million signatures they’ll need to get the initiative onto the ballot.
The text of the initiative is one page long and promises potentially “tens of millions of dollars” in tax revenue to the state against “low tens of millions” in state regulatory costs. The initiative, which would legalize roulette, dice games and sports betting at California’s many tribal casinos as well as at horse racetracks, excludes the state’s card rooms and other commercial locations (like pro sports stadiums) from having sports wagering. The proposed initiative was filed with the state in November. The tribes now have until June 25 to collect signatures, and must report to the Secretary of State when 25 percent of needed signatures are obtained.
The referendum calls for a 10 percent tax on gross gaming revenue from sports bets placed at racetracks, includes a college carveout for California teams, and prohibits state-wide mobile wagering — which is now the driver of nearly 90% of legal wagers in New Jersey and Pennsylvania. Thus, on balance, the proposal won’t be attractive to potential operators for at least two key reasons — prohibiting betting on college sports still leaves a foothold for the black market, and state-wide mobile has been proven to be where the bulk of the money is.
Big market has less appeal with narrow legalization
While California would be the country’s largest sports betting market, the appeal would be drastically tempered by the narrow focus of this proposal, especially considering that California has a seemingly endless list of big-time college programs ranging from Stanford basketball and football in the Bay Area to UCLA and USC football and basketball in Los Angeles to San Diego State basketball in San Diego. While more expansive in terms of sheer number of physical casinos, the market would be most akin to another . New York’s current setup, another huge population center where legal sports betting is only allowed on premises of four upstate commercial casinos and tribal casinos.
There are, of course, no shortage of professional teams to bet on in the state — five Major League Baseball teams, four NBA teams, three NHL teams, and three (with the Raiders impending move to Las Vegas) NFL teams. Keeping bettors from wagering online on any of the teams in that massive list is the wrong move, according to stakeholders.
But like tribes across the country, California’s Indian gaming community continues to eschew mobile sports betting. In general, tribes are against mobile sports betting because they believe it keeps patrons from visiting their properties and allows them to bet from anywhere. In addition, there is a question about exclusivity — if a tribe is the only game in town why would it want to give that up by allowing tribes to compete with them online? Michigan’s tribes signed off on a mobile bill that became law late last year, but so far, tribes across the country are mostly opposed.
In California, a ballot initiative that promises new revenue with no new taxes could be a pretty easy sell. The average voter may not note the nuances of the initiative or be able to identify what is “missing,” at least from a stakeholder perspective. But lawmakers and the state’s card rooms, which were left off the initiative, are already mobilizing with proposals of their own.
Representative Aaron Gray and Senator Bill Dodd have been championing sports betting for the last several years, and held a hearing on the topic in Sacramento earlier this month. In June of 2019, the pair filed legislation that will be more inclusive and will call for state-wide mobile sports betting. The bill would also require voter approval.
Stakeholders: Mobile critical in California
The mobile piece could be particularly important in California. While San Diego is ringed with tribal casinos and has the Del Mar Race Course just up the road, the state’s two biggest cities, Los Angeles and San Francisco, are not, meaning that sports bettors would have to get in the car and drive to the nearest casino — more than an hour away in most cases — to place a bet.
That horse racetracks are included in the proposal could mitigate the issue in Los Angeles, home to the Santa Anita racetrack and the Los Alamitos Race Course. But driving to the racetrack still isn’t as convenient as betting online.
— Turnpike Sports (@TurnpikeSports) January 20, 2020
“Without an appealing mobile option, people who want to bet on their phones will continue to do so on the black market,” the NBA’s Dan Spillane said at the January hearing.
And after the hearing earlier this month, Jay Kornegay, Vice President of Race and Sportsbook Operations at the Westgate Las Vegas SuperBook, echoed Dodd’s sentiment: “As we’ve seen in other states, you want to make it as patron-friendly as possible. That means remote signup and mobile wagering.”
California’s card rooms are aligning with lawmakers, and are angry that they were left out of the tribal initiative, but there is a long-standing feud between the card rooms and the tribes of which the proposed referendum is merely the latest chapter. In 2004, the tribes spent more than $30 million to keep slot machines out of card rooms and racetracks.
Kyle Kirkland, president of the California Gaming Association told the Los Angeles Times that the tribal proposal “gives the sports wagering just to the tribes with no real benefit for California.”
California’s tribes are gearing up to make a hard push, both on the initiative and with lawmakers. While signatures are being collected, it’s a sure bet that the powerful tribal lobby will also be working in Sacramento to line up opposition to the commercial approach that would usher in statewide mobile sports wagering.