Everything We Know about California Sports Betting
California Hearing January 8th, 2020
When the PASPA ruling was overturned back in May of 2018, there were a handful of states that were not expected to pursue legal sports betting for a long time, if at all. California was one of those states. Over a year later, nothing changed in The Golden State. Then, out of nowhere, the wheels started to turn in California in late 2019. Now, just two days into the 2020 session, California took a major step forward by having its first ever hearing on legal sports betting.
On January 8th, 2020, the Joint Assembly and Senate Governmental Organization Committees held a meeting in the state capital. The main purpose of the meeting was to get input from industry experts on what exactly a California sports betting market might look like. With the most professional sports teams and the largest population in the country, the California sports betting market would undoubtedly become the biggest in the country, and fast.
Chris Grove of the research firm Eilers and Krejcik Gaming said that the market could be worth $2.5 billion per year in California. However, the inclusion of mobile sports betting would be necessary to reach that potential.
While this hearing was a step in the right direction for California, Grove tweeted out after the hearing that he doesn’t believe California will be seeing legal sports betting in the near future. “I don’t see California passing a sports betting bill this year. You could *feel* the obstruction in the room.” It is worth noting that there were no representatives of the state’s tribal casinos, card rooms or racetracks at the hearing.
Gambling bills in California need a two-thirds supermajority if they are to pass the state legislature since they are taw-related bills. A number that high is nearly impossible to reach unless everyone is on the same page. With state tribes wanting exclusivity to offer legal sports betting, card rooms and racetracks in the state may be at a huge disadvantage. Right now, it feels that the best bet for legal sports betting in California is the proposal from the coalition of the state’s tribes last November. Their initiative would give them exclusivity for legal sports betting in California.
California has attempted to legalize online gambling in the state multiple times. California has legalized daily fantasy sports, however, DFS has the distinction of not being classified as online betting. Despite some progress on the issue, the attempts to legalize online sports betting hasn’t become reality. Given the state’s notoriously difficult politics, it is unclear when expanded gaming, that will include online gaming, will occur. Since state residents are free to play with offshore casinos, the state is losing large amounts of revenue due to internecine warfare.
Eastern states like New Jersey, Pennsylvania and Indiana jumped at the opportunity and are reaping the benefits. Will California get it’s act together in 2020? We don’t know, but this hearing wasn’t what we hoped it would be.
However, more states are jumping on the wagon, which is loaded with much-needed revenue generated by sports gambling. Will the pressure of seeing other states going online impact the Tribes and California Legislators? We’ll see.
|CA Sports Betting Fact Sheet||Details|
|What is the Betting market size of California?||California will be the largest betting market in the United States|
|What is the current Legislation Status?||Tribal Casinos have state wide approval to petition for a 2020 ballot and allow sports betting only at tribal casinos and horse tracks.|
|How many Tribal Casinos are there in California?||69 Total, 50 Indian Casinos, 16 Indian Casino Resorts, 3 mini casinos|
|Is Sports Betting Legal in California?||No|
|Is Legal Mobile Sports Betting in California?||No|
|Is Legal Casino Betting in California?||Yes|
|Is Legal Mobile Casino Betting in California?||No|
|Is Daily Fantasy Sports in California?||Not strictly speaking as there is now legislation, but DFS operators have been operating in the state for years and set a precedent.|
|Is Lottery legal in California?||Yes|
|Is Online Lottery in California?||Yes, via lottery messenger services. It's a legal grey area at the moment, but they have been establishing some precedent.|
|Is Horse Racing legal in California?||Yes|
Where We Are Currently on California Sportsbooks
Many thought California would be a foregone conclusion to legislate law that made sports betting legal. Anyone living in the state appreciates the financial struggles of state agencies. They’re frequent news for Californians.
So too is the push to legalize all types of things to help the state generate revenue. There was a great deal of hope that a petition would receive enough support to put a sports betting referendum on a statewide ballot by 2020.
Early in 2019, both the petition idea and a call for lawmakers to propose legislation, each failed. Right now, there is a great deal of conversation surrounding California sports betting, but there appears to be nothing on the immediate horizon.
Still, with their proximity to the original betting capital of the world, Las Vegas, and a clear sense of the enormous amount of revenue sports betting will produce, Californians remain hopeful. Until then, picking the most viable physical sportsbook locations and online providers is conjecture. However, we will do our best to give you a look inside which of these options has the best chance if and when California passes sports betting legislation.
California Sports Betting FAQ
Q: Is Online Sports Betting Legal in California?
Q: Is Daily Fantasy Sports Legal in California?
A: No, but CA doesn’t prevent users from entering the contests and playing. All major DFS operators are live in CA.
Q: Can you bet on Horse Racing in California?
A: Yes, at multiple race tracks
Q: Is there hope for a 2020 Sports Betting Ballot?
A: Yes, but it’s only a possibility for Tribal Casinos as this point. If enough petitions are signed, Tribal casinos could have something on the ballot by November, 2020.
Tribal Tribulations in the Golden StateOne problem that California sportsbook hopefuls are facing is the resistance put up by the tribal casino facilities in the Golden State. None in California much interest at all in racing to the lead to secure sportsbook approval.
Even fewer showed any sense they would be eager to share the benefits with commercial entities when sports betting becomes legal in the state. There is an ongoing war of words between the California Nations Indian Gaming Association (CNIGA) and independent card rooms.
The CNIGA has no interest in agitating that debate by opening up the window for sports gambling. Working against the CNIGA is a federal ruling from 2016. This threw out all revenue sharing agreements between the tribal casinos and the state.
Consequently, the amount of the monetary contribution to the California General Fund plummeted from $330 million to a paltry $3.6 million. This could prove to be a highly debated subject when lawmakers are forced to decide between loyalty to the once lucrative tribal casino industry and the healthy push by sportsbook operators.
Best Bets for Physical Sportsbooks in California
Most projections feel that lawmakers will eventually honor that commitment to the tribal casino operations in California. There is also an indication that it will only be initially to provide these established facilities with first-right-of-refusal.
After that, the door will be open to commercial facilities, casino operators with established reputations, to receive the red carpet to do business in California. Here are the physical entities with the best chance of landing a sportsbook facility in the state.
Santa Anita Park
If you understand anything about the Los Angeles area in relation to professional sports, Santa Anita Park is an obvious choice for a physical sportsbook. It’s both famous and fancy. Over the last decade, Santa Anita has hosted the Breeders’ Cup leg of horse racing’s Triple Crown five times.
Address: 285 Huntington Dr, Arcadia, CA 91007
Harrah’s Resort Southern California
Harrah’s is one of the most recognized names in casino resort facilities across the US. They have a massive operation about halfway between San Diego and Los Angeles. The reputation of Harrah’s will be a huge advantage, but this is also another of the tribal casino operations that have yet to show much enthusiasm for California sports betting. Look for that enthusiasm to change when sportsbooks become legal.
Address: 777 S Resort Dr, Valley Center, CA 92082
Tachi Palace Hotel and Casino
Location may prove important, and halfway between LA and the California state capitol will be a huge bonus for the Tachi. It is also located on a fictional triangle with Las Vegas, so anyone who was compelled to drive to Vegas to bet on sports, would find this location right on the way. It’s a massive hotel operation, with one of the largest gaming floors in the US. This would be a prime spot for a sportsbook.
Address: 17225 Jersey Ave, Lemoore, CA 93245
San Manuel Indian Bingo and Casino
One thing that pushes the probability down slightly for the San Manuel is that it’s a tribal casino. As we mentioned, the interest in climbing on the sports betting bandwagon has not been strong. However, if lawmakers legalize sports gambling, it’s a safe bet the fourth largest casino facility in the US will be highly considered as a sportsbook location.
Address: 777 San Manuel Blvd, Highland, CA 92346
Pechanga Resort & Casino
Just below Harrah’s in impressive size is the Pechanga. To give you a perspective of how large the Pechanga Resort and Casino is, it has nearly 4,000 slot machines alone. Three famous Las Vegas casinos, the MGM Grand, the Aria and Bellagio’s have barely over 2,000. With size and luxury in mind, the Pechanga has everything necessary to host a California sportsbook, including the money to finance a dedicated facility.
Address: 45000 Pechanga Pkwy, Temecula, CA 92592
Online Sportsbook Contenders for California
The first step to open sports betting to Californians will be to pass legislation regulating fixed locations. However, this open door will act as a clear path to online sportsbook operations. Too many people utilize mobile devices.
While online sportsbook legalization may take time, once sports betting laws are changed, it will follow soon after. Here are the top contenders to secure online sports betting approval in California.
DraftKings – DraftKings is currently operating an online sportsbook in New Jersey. However, with rival daily fantasy sports provider FanDuel, they are head and shoulders above the competition in collective sports betting revenue.
Ties to major casinos in New Jersey, plus links to sportsbook operations planned for other states make DraftKings a leading candidate to provide online sports betting in California as well. DraftKings also inked a deal with Caesars earlier in the year, further supporting their reputation.
FanDuel – When you lock up the lead in sports bet revenue three out of four months to begin the year, you cement yourself as one of the leading online sportsbooks. This may come as a surprise to anyone who is not associated with FanDuel.
They were ready to be a huge factor in New Jersey. Like DraftKings, they will be a strong competitor for online sportsbooks in all states that legalize sports betting, including California.
playMGM Sportsbook app – With their largest single casino operation only a few miles away in Las Vegas, MGM will be both a viable contender for a physical location and an online operation.
Since they already have an affiliation with the California Gaming Commission, this will prove a valuable tool in their attempts to acquire the necessary state licenses when they become available.
William Hill – Another sportsbook app that could make some noise in California is William Hill. They currently operate sportsbook and online gaming options for more than a dozen physical Las Vegas casinos. The current involvement in the western US and proximity to California gives William Hill an edge to secure the necessary approval in California.
Attempts to Legalize Online Poker
Efforts were made in 2016 and 2017 to legalize online poker. This follows successive efforts going back a decade. The bills would have allowed card rooms and licensed tribal casinos to offer online poker. The state’s horse tracks would have received an infusion of up to $57 million in the California Horse Racing Internet Poker Account. The proposed bill both explicitly made it legal to play poker online in a licensed medium and provided the framework for poker operators to become registered.
The various bills have floundered due to the same factors manifesting themselves repeatedly. The bill requires a suitability determination in which the proposed operators must be judged based in part on past actions. This would likely disqualify PokerStars from the marketplace since it continued to offer online poker notwithstanding the 2006 federal statute that made online poker illegal. Its operation of online poker games after UIGEA would render it a “bad actor” under the proposed legislation, and its participation could be barred. PokerStars exerted efforts to lobby against the previous iterations of this legislation, and its opposition was one of the main reasons that the previous two bills failed. There was a version of the legalization bill that would have allowed PokerStars to pay a fine for previous actions and be allowed to participate in the online poker market. This bill, however, did not garner sufficient legislative support.
At the same time, the tribal casinos have opposed online poker legalization as well. Tribal casinos want to use the legislation as an impetus to restrict the games that California’s card rooms are allowed to offer. These card rooms have attempted to offer blackjack and pai gow poker which the tribal casinos view as competition. The tribal casinos, who currently dominate gaming in California, have much to lose if there is a version of the legislation that passes that either allows PokerStars into the market or does not cut back on the card rooms’ offerings. To date, these casinos have opposed all efforts to legalize online poker.
Other Attempts at Gaming Legalization
All types of gaming expansion have run into obstacles in California. There have been attempts to legalize daily fantasy sports in California. The California Assembly passed a legalization bill in 2016 by an overwhelming margin and passage seemed assured in the Senate. However, the Senate proved to be a much tougher proposition as no action was taken on the bill, which did not even receive a vote. One factor in the derailment of the bill was tribal opposition to its passage which stopped progress towards passage dead in its tracks. Although DFS has not yet been legalized in California, there has been no impediment to California residents entering the contests.
Sportsbooks have run into similar opposition and attempts to legalize thus far have failed. For sportsbooks, however, it is still early in the game after the Supreme Court’s ruling in Murphy. The ruling lifted the federal ban on gambling and essentially allowed sports betting to be legal in the US. There was a bill introduced to allow for a referendum that would allow sports betting, but the legislation failed to garner the two thirds support necessary to place the issue on the 2018 ballot. There are efforts underway to place this on the ballot for 2020, but tribal casinos have opposed anything that they believe would infringe on their exclusivity for offering casino games in the state. Any bill that would give the card rooms a role in sports betting will be vigorously opposed by the tribal casinos.
There are no online lottery or online table game offerings in CA. It begs the question, why not an online lottery? California is a state desperately in need of more tax dollars. We’ve seen the success of the Michigan Lottery online and the PA iLottery online. The online betting legalization efforts have been focused on online sports betting (infancy stage bills), poker and there have been no efforts to legalize other forms of online casinos. Given the strenuous opposition to poker and sports wagering, any sort of other online expansion of gambling is likely to be opposed by the tribal casinos.
One tribal casino attempted to undertake its own online gambling operations by offering online bingo while expressing an interest in online poker. After a multi-year legal battle, the Court of Appeals held that UIGEA prohibited the tribe’s online gaming offerings. It also held that the Indian Gaming Regulatory Act did not pre-empt UIGEA.
How Can Californians Place Sports Bets Now?
Californians have a slight advantage over other state residents. It’s a fairly short drive to Las Vegas. Sure, anyone can fly to Vegas and bet on sports, but it’s just more convenient from California. In fact, it happens a lot.
Another heavily debated subject in California is the obvious fact that many Californians use illegal avenues to bet on sports. This not only takes most or all of any potential revenue away from the state, it presents a moral question for both lawmakers and residents.
The pipeline from Los Angeles to Las Vegas is a well-traveled route for sportsbook enthusiasts, often to avoid illegal consequences. Even though the petition and initial referendum failed, the potential for legal sports betting in California is good.
It’s just going to take a little longer than most of the oddsmakers projected. By the end of the year, close to half the states in the US could have legal sportsbooks. Don’t expect California to be left on the outside looking in for long.
Bottom Line on California Sports Betting
When you sit with more professional sports teams than any state in the country, you’re going to have millions of fans. Many of these avid sports enthusiasts would like to bet on their team. In California, they can hope a quick flight or take a drive to Las Vegas, but that does little or nothing for the state treasury.
Nearly every calculation from states who have legalized sports betting strongly considers population numbers. When you combine the most teams with the most people in the country, the estimated numbers for sports betting in California are staggering.
Early efforts have met with some resistance, and a lackadaisical approach caused a couple efforts to fizzle before they even got started. Look for those behind the efforts to gain access to legal sports betting in California to learn from their mistakes.
There is just too large a presence in professional sports and too vast a population of people for California to ignore the financial windfall sports betting will create. For the time being, Californians will have to be patient and what’s legal in Vegas will have to stay in Vegas.
What’s the Short-Term Outlook for Bills?
The current prospects for legalization in short order are not good. 2018 was the first year in many years that the online poker bill was not even introduced in the Assembly. The 2017 process was bitter and contentious and the bill’s proponents felt the need to let the issue rest for a year before trying again next year. Tribal interests will simply not allow these bills to proceed until the legislative process restricts the card rooms.
There is a chance that this issue will be addressed eventually. Over the 10 years that expanded gaming has been on the legislative agenda, numerous opponents have been brought into the tent by various compromises that advanced their interests. At some point, it is likely that there will be a compromise that can overcome tribal opposition. Otherwise, there could be a public groundswell of support for expanded gaming as other states legalize both online poker and sports betting. At some point, the benefits to both the state and its residents may overcome tribal opposition. Another possibility is that California can find a way to package online poker in the same legislation as sports betting in a manner that can ride a wave of public support.
As the largest state in the country, California is a lucrative potential market for the gambling industry. However, betting in California is still curtailed due to the structure of the state’s laws. The state trails behind other states with respect to legalizing various forms of gambling. While debate continues, few concrete steps have been taken towards permitting the types of wagering that are currently being legalized in other states. Sports betting operators like FanDuel Sportsbook & DraftKings Sportsbook are eagerly awaiting the legalization of online betting in California. It’s a profit gold mine waiting to be realized. There is currently no way for a person in California to legally bet on sports online.
Legislative Vehicles for Wagering in California
California was a former mecca of gambling during the Gold Rush era. Today, however, there are no traditional casinos in the state. Nonetheless, the California Code largely defers to local governments in setting laws for gambling. Further, there are relatively light punishments in the California Penal Code for those convicted of gambling-related offenses.
Gambling in California has largely been approved through several legislative vehicles. First, card rooms are legal under California law. Card rooms may offer card games, but not banked card games which includes baccarat and blackjack. Second, the Indian Gaming Regulatory Act, a federal law, permits Indian tribes to operate casinos. This law was passed in part due to the successful legal challenge of federal law brought by a California tribe. The Indian casinos offer a wider variety of games than do card rooms. This is because in 2000, California voters approved a referendum that permitted Indian casinos to offer table games and slots on their lands. The state is authorized to negotiate compacts with individual tribes that dictate the taxes that must be paid and the revenue sharing required with tribe members.
Other legislative vehicles for wagering in California are the horse racing venues, the state lottery and daily fantasy sports. Horse racing was legalized in California in 1933. California has a large pari mutual industry, with six physical tracks and 30 off-track betting facilities. Additionally, the state lottery was legalized in 1984, and the California Lottery has been very successful. In 2016, California took steps toward legalizing daily fantasy sports. While California online sports betting and poker playing are still illegal, the state has not taken action against offshore entities that accept California players.
Current Challenges Faced
There is currently a fierce dispute between the Indian casinos and the card rooms as to which games the card rooms may offer and what constitutes a banked table game. The Indian casinos have been fiercely protective of their “turf” despite numerous challenges to their special status in California. For example, in 2002, Larry Flynt sued the California Gambling Control Commission, seeking to overturn the special status enjoyed by Indian casinos, whereby they can offer card games that non-Indian casinos cannot. The California Court of Appeal concluded that it was not unconstitutional for Indian casinos to have different rights. The Indian tribes have plenty of political influence and use that power to attempt to slow down any development that would threaten their hegemony in the marketplace. Since non-Indian casino operators are locked out of the California market, the fiercest competition is among the Indian casinos. The lack of a presence among the traditional casino operators lessens the competition that usually results in increased player benefits.
One of the bigger challenges that is faced is the vagueness of California gaming laws. These laws do not make it illegal for players to wager in the state. There is a gray area in California law regarding whether it is permitted to operate online casinos in the state. This impedes some operators from moving into the California market. Some online casinos do accept California residents, but there is no mechanism to regulate online gambling in California.
Another challenge is the restrictions placed on those wishing to operate card rooms. Interests from outside California are prohibited from purchasing stakes in card rooms. Additionally, publicly traded companies may not own card rooms. Finally, California’s notoriously fractious politics and referendum system make getting anything done politically a steep challenge. It is thought that allowing commercial casino operators into California will require an amendment to the California Constitution. California voters are notoriously difficult to predict and it is often difficult to achieve any kind of consensus in the state.
Metrics of the California Gaming Market
As the largest state in the country, the size of the California gambling market is huge. There is tremendous potential for casino operators given the sheer number of California residents and their relative wealth.
Tribal casinos dominate the state’s gambling landscape. Currently, there are 69 Indian casinos in California. There are 66 card rooms operating in the state. As of 2015, the combined revenues of the tribal casinos was over $7 billion. The card rooms produce over $2 billion in economic activity annually and contribute $300 million in tax revenues.
The daily fantasy market is difficult to gauge, but it is estimated that Californians provide the DFS operators with a large fraction of their revenues. As of 2016, it was estimated that revenues from California DFS players totalled $20 million. California made up over 10 percent of all DFS entries in the United States.
The horse racing wagering market in California is large to say the least, even with the decline in the sport’s popularity across the United States. In 2017, total handle between on-track and telephonic wagers totaled close $1 billion. A total of $3 billion was wagered on the state’s races from all sources in California.
Future of Betting in California
The future landscape of gambling in California is difficult to predict. This is because of the litigious nature of market participants and California’s notoriously difficult politics. Large changes to the existing system must be placed in front of the voters in referendums, which are notoriously unpredictable. Given the atmosphere in California, it is anybody’s guess what shape the wagering market may take in the years to come.
For instance, in the wake of the Supreme Court’s decision in Murphy that struck down the federal law banning sports wagering as unconstitutional, states have moved with lighting speed to legalize sports betting. That does not apply to California. Despite attempts to place legalization on the ballot in 2018, efforts stalled. It is likely that legalization of sports betting will now have to wait until the next election in 2020.
Further complicating any firm idea of the state’s betting future is the fact that any move to expand offerings invariably leads to a lawsuit from a competitor or another interested party. This places the state’s gambling future in the hands of individual judges whose decisions are often difficult to predict. For example, the Iipay Nation of Santa Ysabel tribe attempted to start online bingo games, only to have the decision challenged in court. An appeals court ruled that it was a violation of the UIGEA and ordered the tribe to cease the operation.
It is difficult to predict how the tug-of-war between Indian tribes and the card rooms will unfold. It is also tough to foresee how the intra-tribal rivalries will play out with regards to gambling. Finally, it is challenging to gain any visibility as to how judges will rule with regard to the invariable further challenges to expansion of online gaming in California. Therefore, the only certainty with regard to the California market is that it will continue to grow.