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California sports bet bill looks to stay alive

As their state’s budget deficit spirals toward twelve figures, a pair of California politicos have been promoting a legalized sports wagering referendum bill whose next hurdle arrives Thursday.

Should SCA-6 pass that Senate Appropriations Committee Suspense Hearing vote by the required two-thirds majority, the California Sports Wagering and Consumer Protection Act would next advance to the Assembly and require the same two-thirds margin, by a June 25 deadline, to get on the November ballot, where the people would have their say.

Even then, there would be no guarantees. So it might be wise to hold off betting on locals being able to wager on the Los Angeles Lakers or San Francisco 49ers on their own turf in the near future.

“Tribal opposition is fierce,” says Jill R. Dorson, Sports Handle’s deputy editor who is based in the San Diego area. “Even if this gets on the ballot and even if it passes, I don’t think there will be sports betting in California anytime soon because the tribes will sue.”

Gov. Gavin Newsom is under fire from all angles for proposing a wide swath of drastic budget cuts, including education and healthcare for the impoverished, in the wake of the coronavirus lockdown’s devastation on California’s economy. A year ago, Democratic Sen. Bill Dodd and Assemblyman Adam Gray first penned the state constitutional amendment to Section 19 of Article IV, to allow wagering on professional sports. They say it will generate more than $200 million in tax revenue over its first year, approximately $600 million annually as the market matures.

Preliminary projections in other jurisdictions have often been off, sometimes woefully short. 

Dodd told the Los Angeles Times that it’s imperative to unearth new revenue sources, “and here’s one with real money. There’s already billions of dollars of illegal sports gambling going on in the state. There’s no regulatory framework. There’s no taxation.”

The Dodd-Gray proposal, with the usual minimum age of 21, omits collegiate sports. It would allow statewide remote registration and mobile sports betting, which has been very profitable in Indiana, New Jersey and Pennsylvania.

The bill sets the tax rate of tribal casinos, which would be allowed to add craps and roulette, at 10 percent, 15 percent for online/mobile and four horse racetracks, including Del Mar and Santa Anita. Nevada’s tax rate is 6¾ percent, with a quarter-percent federal stipend.

It would foster competition, according to its authors, by allowing multiple sportsbooks to be contracted, making it a buyers’ market. An online-operator license fee would run $5 million, with an annual renewal rate of $1 million.

Native American factions would prefer to have patrons betting on the Rams and Chargers on their own brick-and-mortar grounds, rather than from the comforts of couches, a bar or the beach. Moreover, the state can’t technically tax a tribal interest, said Dorson, so the bill would require them to link with a commercial carrier — DraftKings, say, or Penn National — that would bear that tax.

“The tribes don’t want to invite commercial interests into bed with them and have not embraced this idea,” Dorson said.

In California, natives Kevin and Mike (who asked that their last names not be made public), who have been wagering on sports, primarily college basketball and football, through efficient and dependable offshore and illicit-bookie avenues for many years, downplayed the proposal.

Both are in their mid-50s and call themselves recreational bettors. In Northern California, Kevin is so exasperated with the state’s incessant taxation ploys he would not patronize such shops. He would continue betting via his usual methods, and taking trips to Lake Tahoe and Reno.

Mike, who lives in Southern California, would explore getting 1½ points, say, instead of 1, or paying only -110 for a side or total instead of -120. He’d scout for differences to capitalize on discrepancies, targeting optimal middling opportunities. He’d keep making regular golf and gambling ventures to Las Vegas.

Dorson has not discovered wording in the bill that links the California Lottery as a potential industry regulator, another plus for the consumer since lottery commissions in other states have fairly botched directing sports betting operations.

The powers at the major sports leagues, whose official data-use is mandated, reportedly support SCA-6.

It would also make the legality of card rooms permanent, ending their long battles with tribes, who have sued multiple times, claiming such rooms encroach upon their gambling exclusivity, and the state attorney general, but it would not allow sports betting in those rooms.

Tribal casinos would be able to add craps and roulette. They had been seeking their own ballot initiative, but the lockdown halted their signature-gathering abilities. They have sued to resume collecting signatures to block the pending legislation.

In Las Vegas, two veteran sportsbook figures who requested anonymity were asked how the proposal might affect Nevada should it eventually become law.

“Depends,” said one. “Some would obviously look at it as a threat. Others would see opportunity and seek partnerships.”

The other highlighted how the explosion of the industry around the nation, as 18 other jurisdictions now have legal sports betting and five are preparing to launch operations, has not directly impacted Nevada.

“But California, that’s our No. 1 (outside) market. It would certainly have an impact, for sure. Unless the pricing models there were like some of the ones we’re seeing around the country, like Oregon.”

In that nascent market, instead of typical 10-cent lines, 30-, 40- and 50-cent lines have appeared, attracting immediate red flags by industry experts and veterans.

“It could impact Nevada handle initially, then we’d have to see how that plays out. It would depend on what they’re offering, straight bets and/or parlays, and what the juice is, things like that. Overall, it isn’t something that would help.

“I won’t be a voice of doom and gloom, but I’ll put it to you this way, it would have an impact more than any other jurisdiction. We’ll keep an eye on it, for sure. Legislatively, it’ll be a big challenge there. But, you know what? Nothing would surprise me.”

Dorson believes a mature California market could become the biggest sports betting jurisdiction in the world, but she sets long odds on that happening.

“There are an enormous amount of details to work out,” she said. “And the government and tribes here are not on the same page.”