Large Interests at Play before Vote on Fate of Sports Betting in California

Keep the Tribe Monopoly or Open the Floodgates for Online Wagering

In the next general election in November this year, voters in the state of California will give their say on what the fate of sports betting in their jurisdiction would be. There are two options, shaped up in Proposition 26 which will preserve the existing monopoly of the tribes over gambling and even expand its scope, and in Proposition 27 which will open the floodgates for online and mobile wagering on sports.

The adoption of Proposition 26 will keep the tribes in full control of gambling as it envisages “on-site sports wagering at only privately operated horse-racing tracks in four specified counties”. The Proposition will also enlarge the catalogue of table games permitted in tribal casinos with the addition of roulette wheels and dice-based games.

If the voters go for Proposition 27, large operators such as BetMGM, DraftKings and FanDuel will be allowed to apply for licenses in California. Reportedly, the license itself will cost $100 million and the operator will have to be licensed in at least 10 other states in order to be eligible to apply.

The Battle of the Lobbies

The price of $100 million for a license may sound huge, but it is nothing compared to the revenues that can be generated in the most populous state in the US. This sum also coincides with the amounts that each of the Pro 26 and the Pro 27 lobby groups have pledged to spend on their campaigns.

If online betting on sports is allowed in California, new revenues for the state would amount to hundreds of millions of dollars and could reach up to $3 billion, according to a statement by BetMGM. The lion’s share of 85 percent would go towards funding projects to battle homelessness, as well as mental health and addictions problems. The remaining 15 percent of the expected revenues will be given to tribes in the state that are not involved in the gambling industry.

The tribes that run gambling activities, naturally, are opposing Proposition 27 and supporting Proposition 26 which will keep state revenues within the scope of tens of millions of dollars and preserve the black market business of corner and barroom bookies besides tribal legal monopoly.

The tribes point out that allowing online betting would “break the promise” of tribal sovereignty over gambling in California and would redirect profits to companies based outside the state, instead of keeping them for the local tribes.

Another argument brought forward by the tribes is that Proposition 27 would turn “every phone, laptop and tablet into a gambling device” exposing the public to risks and limiting responsible gaming protection. However, this argument is hardly valid given the estimated size of illegal sports betting in the USA of $1.7 billion annually and considering that regulated gambling, even if online, provides incomparably greater customer protection than the black market.

The tribes also fear that the next step would be to allow online casino gaming which would totally destroy what has remained from their monopoly.

In the four years since the US Supreme Court struck down the federal ban for states to authorize betting on sport events, more than 30 states have already legalized sports wagering with 18 of them allowing it to happen online.

The November general elections will show if the California tribes will manage to preserve this profitable business for themselves, or the state, otherwise famous for its progressiveness, will be finally able to join the wave of territories expanding their tax collection base by allowing their citizens to enjoy legal and safe sports betting products rather than shady black market options.

A Sharp Contrast

Unlike the American state of California, where the debate whether to allow legal online betting on sports is focused on purely pragmatic matters, a moralistic stance on gambling is prompting the government of Indian state Tamil Nadu to seek a measure going way beyond prohibiting Indian casino online and sports betting activities to banning all forms of online gaming including even esports when played for a prize.

A law amendment containing a blanket ban on all forms of online gaming involving “electronic transfer of funds” for wagering or betting on the game was enacted by the previous state government in the beginning of 2021. However, in August of the same year, the state’s High Court struck the gaming ban as “excessive, disproportionate, unreasonable, and manifestly arbitrary” and contradictory to the constitution of the country.

The next government of Tamil Nadu decided to appeal this judgment at the Supreme Court of India, and while waiting for the final verdict, the opposition and the ruling party started exchanging blows in the state’s Legislative Assembly blaming each other for the failure to ban online games.

While the political class skirmishes over a clearly populistic move, many voices question the effectiveness of such an online gaming ban and call for regulation instead.

“Even if they pass a state law, the gaming and gambling applications will still be available in the App Store and Playstore,” says a lawyer and expert on internet-related law.

“Some of these are available in open source platforms so it can be shared. So how will the state monitor and take action? How will they know that someone is playing these games until it is reported. So banning online games isn’t a solution but it should be restricted like it is done in other countries where they have limitations to prevent addiction and a limit on how much money can be spent in a day.”


Exit mobile version