Why is Sports Betting Illegal in California?

Sports betting has come a long way within a very short space of time in the US, with more than 30 states now allowing wagering within their shores.

The watershed moment for betting in the country came in May 2018, when the Supreme Court struck down the Professional and Amateur Sports Protection Act, PAPSA, which had made sports betting illegal in the vast majority of American states.

Following that ruling by the apex court, each state was given the power to make its own sports betting laws.

The states have adopted sports betting at different paces. New Jersey gave betting the green light in June 2018, while New York didn't go live until January 2022. Massachusetts finally got going in March 2023.

Quite interestingly, the three most populous states in the US- California, Florida and Texas- still do not allow online sports betting.

California is America's largest state by population, with just under 40 million inhabitants according to the 2021 census. That is about 12% of the entire population of the United States.

The state also hosts some of the biggest sports teams in the land, including the Los Angeles Lakers, Golden State Warriors and the San Francisco 49ers.

You would think that the state is tailor-made for sports betting- except that betting is not legal in CA.

It's particularly galling for betting enthusiasts in California because neighboring states Arizona, Oregon and Nevada have all legalized sports betting.

In fact, Nevada and Arizona have become the top two sports betting states, in terms of handle, in the west.

Arizona's growth has particularly been impressive, given that the first sportsbooks in the state did not launch until September 2021 (unlike Nevada, which had been allowing sports betting long before the Supreme Court ruled against the infamous Professional and Amateur Sports Protection Act in May 2018).

So while CA's eastern neighbors in AZ can freely place sports wagers and sink their teeth into the numerous betting bonuses and offers available in Arizona, potential bettors in the Golden State are still waiting (im)patiently for the go ahead to join in the fun.

The more desperate ones have gone beyond the borders into other states to legally place sports wagers.

So what exactly is the problem? Why is sports betting not legal in California?

It isn’t that Californians cannot gamble at all. They can play casino games like slot machines and poker at the numerous tribal casinos in the state, while wagering on horse tracks and card rooms, as well as the state lottery present gambling options.

However, sports betting has become the new shiny bride in American gambling, and Californians cannot partake in it.

It isn't for the want of trying that a pro-betting law has not been passed in the state. However, such attempts have unfortunately been met by several roadblocks.

Hopes were raised in November 2022 when a couple of betting propositions went to ballot, but Prop 26 and Prop 27 were soundly struck down by California voters.

It didn't help that state governor Gavin Newsom hadn't been a supporter of the Props, claiming that allowing sports betting in the state would harm California's Native American tribes and draw minors into gambling, but the main opposition came from the tribes themselves.

Proposition 26 would have allowed sports betting at tribal casinos in California, and was backed by tribal governments, while Proposition 27, pushed by betting heavyweights like FanDuel and DraftKings, wanted online and mobile sports betting to be legalized.

Unsurprisingly, Prop 27 was opposed by the native tribes, as that would be a direct rival to their prospering gambling business. It garnered only 17.72% of the votes cast. Prop 26 fared a little bit better, pulling 33.02% of CA voters. 

Supporters of the two props spent about $450 million to push their agenda, making it the most expensive ballot measure fight in the nation's history.

California is home to more than 80 tribal casinos, which generate around $8 billion in yearly revenue. That is not too dissimilar to the numbers from neighboring Nevada. 

The tribes currently enjoy a thriving monopoly on gambling in the state, and are naturally unwilling to let it go.

The most realistic way forward for sports betting companies would be some sort of merger with the tribes, where betting would be legal, but wagering would only be allowed in the tribal casinos. 

This is not the first time that tribal casinos have gone head-to-head with sports betting protagonists in a US state, with Connecticut and New Jersey providing examples of states where compromises have been reached.

In Connecticut, home of the popular Mohegan Sun and Foxwood Resort Casinos, they managed to work out an agreement which has FanDuel partnering with Mohegan Sun and DraftKings teaming up with Mashantucket Pequot Tribal Nation, owners of Foxwood Resorts.

Allowing sports wagering in tribal casinos would be a very smart move by Californian tribes, as it would bring in more people, and of course generate even more revenue.

While some industry experts believe sports betting could come to California as early as 2024, reality would suggest that would be optimistic in the extreme.

Like DraftKings CEO, Jason Robins said in a recent interview, "if someone wants to spend that much in opposition, it makes it tough", in reference to the amount of money spent in opposing the pro-betting propositions. 

"So until we figure out a way to work that out, I don’t think it’s a 2024 thing", he conceded.

The tribes are also taking no prisoners in the defense of their territory, with Victor Rocha, conference chairperson for the national Indian Gaming Association, bullishly claiming after November's ballot that “Everybody knows this... You don’t come and try to screw the tribes.”

Native tribes in California wield a lot more power than in any other state in the country, and will fight very hard to guard their interests.

Not that America's heavyweight sportsbooks are going to just give up. California is too important for betting companies to just walk away from. There will be more deliberations and attempts at legalizing sports betting in California.

If and when betting will be legal is not entirely clear at the moment.