When Will California Legalize Sports Betting?

As of April 2023, there are 33 states that have legal sports betting but the most populous state, California, isn’t one of them. While the taxes from sports betting for the state would be huge and the battle to legalize it is still a hot topic, it may be a while before a legal sports wager can take place in the Golden State.

With California being such a cash cow for online sportsbook operators all the big names, such as Caesars, DraftKings, and Fan Duel, will all vie to get a piece of the pie. For more information on one of the biggest players in the industry, Caesars, click here.

Legislators are still working to get the ball rolling for sports betting in the state. However, there were a couple of propositions on the ballot in November of last year dealing with legal sports betting and they came nowhere near being passed. Not only will mobile sports betting in the state need another vote from residents but also require a constitutional amendment. In the best-case scenario, the earliest California would have legal sports wagering is 2024 and that may even be a stretch.

The Propositions

The propositions that were soundly beaten in November were Prop 26 and Prop 27. Prop 26 would have legalized sports betting at the retail location of 66 tribal casinos in the state as well as at the racetracks of Santa Anita Park, Del Mar Race Track, Golden Gate Fields, and Los Alamitos Race Course. In terms of the initiative online betting would still be illegal, which was a big deal to operators of major online sportsbooks.

Prop 27 did have legal online sports betting in the initiative. Operators of private online sportsbooks would be in partnership with the Native American tribes to have mobile sports wagering on offer. Californians would be able to download the sportsbook application and bet and home and on the go.

It was not a big surprise that the November propositions failed since the polls pointed to that happening. However, it is a little surprising considering the massive amount of money that was raised by the campaigns on both sides of the fence.
It was reported by Cal Matters that the committees that were in favor and not in favor of the propositions garnered in excess of $450 million for their campaigns. That amount was almost twice as much as the previous record for campaign funding for Prop 22. That proposition exempted such businesses as Lyft and Uber from enacting a California law that would require the companies to have their workers treated as employees.

The vice president of public affairs for Pechanga Band of Indians Jacob Mejia stated, “The reality is, we didn’t undertake any meaningful advertising for Yes on 26.” The Pechanga tribe wanted retail betting but was opposed to the measure legalizing online betting. He told Cal Matters, “Our focus was purely on defeating Proposition 27 after that measure came to fruition.”
According to Sonoma State political science chairman David McCuan when there are two measures that oppose each other in legislation both usually fail. He told the Associated Press, “Whenever we have dueling ballot measures, and the competitors have an arsenal of dollars … the competitors will go nuclear. And in a nuclear war, everybody loses.”

The Main Roadblocks

The main roadblock to legalizing sports betting is coming from the Native American tribes in California. They are under the belief that if it's legalized in the state then not as many patrons would visit their land-based casinos. In the Golden State, there are 80 casinos run by the tribes that bring in annual revenue of nearly $8 billion. The Native American tribes want their monopoly on gambling in the state to continue. The tribes have softened their stance some in the last year or so and some have even welcomed the idea of legal sports betting but they have stated they would have to have full control of the industry.

The other roadblock from those opposed to the legalization of sports betting is they believe it will bring about issues for underage gambling. However, those who wanted Prop 27 to pass have pointed to the fact that countries and other states that have legal sports betting have been successful in curbing underage gambling. The issue was at the forefront at the beginning of online gambling but it never came to fruition. It has been a rare occurrence when an operator has received a fine for underage gambling on their platform.

With the technology used by online sportsbook operators, they can verify a player’s age as well as identity and location as retail betting locales. Besides scanning government-issued ID cards the operators will usually require potential player information, such as a Social Security number and have them answer various personal information questions, such as previous living addresses.
The details given are checked using government databases in order to verify a user’s identity. The details are also stored by the operator so that if there are any issues about the gambling site following the laws of the state the gambling regulators can have digital evidence to see if there were any operator violations.

The Tax Issue

Some experts on the California sports betting issue have come out and stated that the operators need to do their part in order to sway the state’s voters. The operators have proposed a 10% tax rate on sports betting in the Golden State and the experts have said that rate needs to be higher. Still, based on the 10% rate and how the sports betting industry is regulated, there have been estimations that California could bring in $300 million in annual tax revenue.

One of the biggest issues California is dealing with is homelessness. In the November 2022 ballot Prop 27 was the only one that would have given funds to help that issue. If it would have passed 85% of the sports betting tax money would go to services dealing with homelessness, mental health, and addiction. The other 15% would have gone to non-gaming tribes.

To Sum It Up

California is the most populous state in the United States and it will only be a matter of time before sports betting is legal there. However, with the current issues still present there is still no timetable for when that will happen.

- Gilbert Horowitz, Gambling911.com