California Sports Betting

California

Everything We Know about How Sports Betting Online Can Become Legal in California

California has attempted to legalize online gambling in the state multiple times. In addition, California has also attempted to legalize daily fantasy sports in the state. Despite some progress on the issue, neither of these attempts has 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.

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. 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.

Other online casinos offerings in California are currently limited to offshore casinos. There is nothing in California law that makes it illegal to play in these venues, but legal protection for players is nonexistent. There are no online lottery or table game offerings. The legalization efforts have been focused on online poker only 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.

Future Prospects for Passage

The current prospects for online poker 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.

  
Sam Shefrin is the founder of Lineups.com, Inc. Before Lineups, he started Daily Fantasy Cafe, Inc. in 2014. Armed with a passion for sports and every Atlanta team, his journey continues with the goal of making Lineups a premier sports analytics destination. He has been quoted on Forbes.com for industry insight and his websites featured on NBATV, Yahoo! Sports, Fantasy Pros, Bleacher Report and SB Nation.