California Sports-Betting Bill Pulled After Tribal Opposition

A gambler makes bets on the upcoming Super Bowl at Bally’s casino in Atlantic City, N.J., on Jan 29. (AP Photo/Wayne Parry)

SACRAMENTO, Calif. (CN) — A bid to legalize sports gambling in California suffered a major defeat Monday after the bill’s author pulled the measure one day before a critical vote.

Facing intense opposition from the state’s Native American tribes and with the clock ticking on a truncated legislative session, state Senator Bill Dodd, D-Napa, said he’s pausing the legalization effort until 2022. The proposal, Senate Constitutional Amendment 6, was scheduled for a hearing Tuesday in a fiscal committee.

The decision means the nation’s largest state will remain on the sidelines as legalized sports wagering continues to grow in dozens of other states.

“Given the deadlines for getting a measure on the November ballot and the impact of Covid-19 on the public’s ability to weigh in, we were not able to get the bill across the finish line this year,” Dodd said in a statement.

Dodd, who carried similar legislation in previous years, revived the gambling bill this spring and cast it as a way to help fill the state’s record high $54 billion deficit.

He and proponents cited studies predicting legalization could generate $200 million in new revenue in the first year with the potential for $500 million or more in additional years as more sportsbooks go live. The bill cleared its first hurdle earlier this month but Dodd says he simply ran out of time. The proposal needed to clear both houses by a two thirds majority this week in order to qualify for the November ballot.

The proposal would have amended the state constitution and allowed California tribal casinos and the state’s largest racetracks to open sportsbooks. Casinos would have additionally been allowed to contract with companies like DraftKings and FanDuel to offer mobile gambling, which has exploded in popularity in other states.

Since the U.S. Supreme Court cleared the way for New Jersey to begin opening sportsbooks in 2018, over 20 states have legalized some form of sports gambling, leaving California by far the biggest chip yet to fall. Experts claim Californians place an estimated $10 billion or more annually in illegal wagers.

With the state desperate for new revenue sources, Dodd and co-author Assemblyman Adam Gray, D-Merced, hoped to capitalize on the moment and convince lawmakers to put the matter to voters this fall.

The Democrats proposed taxing in-house wagers at 10%, and online and mobile bets at 15%, with the money going into a general fund to “assist the state in recovering from the health and economic damage caused by the Covid-19 pandemic and to fund priorities related to education, public health and public safety.”

“California could easily become one of the most productive sports-betting markets in the world,” said gaming industry analyst Chris Grove during a recent hearing.

But the proposal didn’t gain traction with the state’s tribes who are in the process of spending millions to qualify their own legalization effort.

The tribes’ initiative differs from the lawmakers’ as it shuns cellphone betting and requires them to be made in house. They claim they had nearly collected enough signatures when the pandemic struck and are now focusing on getting their package on the statewide ballot in 2022.

In addition to doubts about mobile betting and its ability to rack up tax revenue, the tribes opposed SCA 6 because it would have affirmed competing cardrooms’ ability to offer games like blackjack and Texas hold ‘em poker.

California currently allows some forms of gambling, including horse racing, table games and slot machines at Indian casinos, and residents can also enter daily fantasy contests.

The tribes contend that in 2000, voters gave them exclusive rights to table games and they have been fighting to shut down cardrooms ever since. By and large, the tribes’ lawsuits have been unfruitful and various California attorneys general have declined to clamp down on cardrooms.

“While we appreciate that the state was trying to find additional revenues during this time, this bill was simply bad policy,” the California Nations Indian Gaming Association said in a statement Monday. “It unjustly rewards the commercial, for-profit gaming industry for their practice of conducting Nevada-style games in flagrant violation of California law. This bill would have also threatened brick-and-mortar establishments by legalizing online gaming, which would reward out-of-state commercial business entities and raise regulatory challenges.”

Though Dodd and Gray were able to court a deep bench of supporters including the country’s major sports leagues, California’s multibillion dollar industry will remain “in the shadows” as bettors continue going to bookies or neighboring Nevada.

“It remains important that we lift this widespread practice out of the shadows to make it safer and to generate money for the people of California. I will continue to be engaged in the issue as we work toward 2022,” Dodd said.

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