California Push for Legal Sports Betting Not Going Away

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Prop lines for Super Bowl LI are displayed on a monitor at the Westgate Las Vegas Resort. Ethan Miller/Getty Images/AFP

The push for a legal sports betting platform in California has been a complicated one but it’s certainly not going away, despite unsuccessful efforts in the past. The state’s tribes, card room operators, legislators —even sports betting providers— have all weighed in on what they feel could be the best approach for an expansive legal sports betting platform in the state.

The latest effort toward a viable legal sports wagering scene in California comes from a coalition of seven sportsbooks. The group has come forward to fund an initiative to bring a widespread mobile sports betting platform to the Golden State.

Bally’s, BetMGM, Fanatics Betting & Gaming, Penn National/Barstool Sportsbook, Wynn and the two DFS giants operating in the broader US scene have vowed to ante up $100 million toward the initiative with a good chunk of taxes generated going to a high-profile issue plaguing the state.

What a California Platform Would Mean

Bringing California into the US legal sports betting fray would be massive for the broader US industry. California would become by far the biggest single market in the country. With 15 professional teams representing four major sports leagues and with an American-high 40 million people, the state’s tribes, betting providers and ultimately the state could greatly benefit from a legal sports betting platform.

BetMGM said California was “one of the most important betting markets in the world.” Chris Grove, a managing director for Eilers and Krejcik Gaming went on record saying that “California is easily the largest prize in the U.S. sports betting market.”

According to Eilers & Krejcik, a research firm that has advised state lawmakers on the issue, a California legal sports betting platform could generate $200 million in annual revenue immediately from taxes and licensing with that total swelling to $500 million upon maturity of the platform.

Those are eye-popping numbers that are going to be hard to ignore.

The gambling provider Heavyweights will be spearheading just one of three proposals that will go before voters on the 2022 election ballot, assuming they gain the necessary 1 million signatures for such a measure to appear.

There is a tribal, retail-only proposal that will be considered, and one other put forth by a collection of California cities in conjunction with the state’s Attorney General to bring about statewide legal mobile betting. And then there is the newest —the one that has been put forth by the sportsbook operators.

The Sportsbook Plan

The sports betting operators’ plan was to be filed with the state’s Attorney General’s Office on Tuesday. That proposal stipulates that any mobile scene would be in conjunction with the state’s tribes.

“Any online sports betting operator seeking to participate in the California marketplace must do so by partnering with a California tribe,” Campaign Manager Dana Williamson told Politico. “A portion of the measure’s revenue is dedicated to uplifting Tribal communities.”

The proposal is titled “California Solutions to Homelessness and Mental Health Support Act” which aims to legalize mobile sports betting and direct the proceeds to an all-too-familiar problem facing Californians – mental health and homelessness. 85% of total revenue would go to homelessness and mental health, with 15% going to tribal communities.

“Permanent solutions require a permanent funding source. The California Solutions to Homelessness and Mental Health Support Act will raise hundreds of millions of dollars annually to fight homelessness and expand mental health support in California by allowing regulated entities to offer safe, responsible sports betting online,” Dana Williamson, a veteran political strategist who advised former Gov. Jerry Brown said.

More Details

The seven sportsbooks that have come forward with the new proposal for the California sports betting scene are vowing to create a competitive, open market for the state.

The plan features a mobile-only platform that paves the way for betting on professional, college and amateur sports. The tax rate would be set at an industry-friendly 10% and there will be no mandated use of official league data.

The operators are proposing an extremely high fee for themselves —some of the highest in the entire US industry. Operators, under their own plan would pay a $100 million initial fee for providers that team up with a California tribe —$10 million for tribes that don’t align with a big-name book. It would last for a period of 5 years.

As of now, there is no hard cap on the number of mobile licenses that would be available, although the rule that mobile operators would have to partner with a tribe make it so that a maximum of 100 platforms could go live.

Making Sure the Platform Is Legit

Under the operators’ proposal, the California industry would be an experienced one right off the bat. Under their own rules, prospective operators would have to be active in at least 10 U.S. jurisdictions OR operate 12 casinos in the U.S. It means a lack of hiccups for a California scene if and when it gets up and running.

There is little doubting the interest in bringing about a legal sports betting platform for Californians. The operators’ proposal makes three viable options for voters and lawmakers to consider. Years of legislative wrangling has resulted in zero success so far, however.

The voters will likely get the chance in 2022 to decide on just what their platform looks like, although the tribes, card rooms and legislators will almost certainly have more to say about the situation before then.

More questions than answers continue to be the theme of the potential for legal sports betting in California. Expect more of the same until November 2022.