All Bets Are Off as Battle Over Legalized Sports Betting in California Heats Up

Gamblers stand at betting windows on the final day of the winter/spring horse racing season at Santa Anita Park in Arcadia, Calif., on June 23, 2019. Mario Tama/Getty Images

A proposal to legalize sports betting in California that could generate billions of dollars in tax revenue—but threatens the tribal monopoly on gambling in the state—has erupted into a political wrestling match as the bill awaits a key vote in the state Senate.

SCA-6 (Senate Constitutional Amendment 6) would legalize online and mobile sports betting, as well as legitimizing the state’s operating cardrooms—two elements vehemently opposed by the Native American tribes.

“Solving the battle between the tribes and the cardrooms is, one could say, almost as tough as solving Middle East peace,” Sen. Bill Dodd (D-Napa), who proposed the bill, told The Epoch Times.

Dodd first proposed SCA-6 in June 2019 to bring illegal sports betting out of the shadows and generate needed money for the state. The bill currently awaits a June 23 hearing and a vote before the state Senate Appropriations Committee before moving on if it passes.

Also known as the California Sports Wagering and Consumer Protection Act, the bill would require a two-thirds majority vote in the state legislature to become a ballot measure for voters to resolve in the Nov. 3 general election.

Native American tribes, which own and operate casinos on their lands throughout the state, are attempting to get their own initiative on the ballot which would legalize sports betting only at their casinos and the racetracks, without mobile wagering.

“It’s become clear that they don’t want the [SCA-6] bill, and they don’t even want to talk about the bill,” Dodd said in a June 16 interview.

Earlier this month, a coalition representing 25 California tribes sued the state, seeking a 90-day extension to qualify their own ballot initiative. The suit argues that the tribes were unable to garner the necessary signatures to get their initiative on the ballot due to delays caused by the COVID-19 pandemic.

The Coalition to Authorize Regulated Sports Wagering filed the lawsuit against California Secretary of State Alex Padilla on June 9 in Sacramento County Superior Court.

More than 20 states have legalized sports betting since 2018, when the U.S. Supreme Court overturned a federal ban on the activity. California voters would have to support a ballot measure to change the state’s constitution to allow sports wagering in the state.

Chairs are spaced out for social distancing at the BetMGM Sports Book at Bellagio Resort & Casino as the Las Vegas Strip property, which has been closed since March 17 in response to the COVID-19 pandemic, prepares to reopen in Las Vegas, Nev., on June 1, 2020. Ethan Miller/Getty Images

A Revenue Windfall

The legalization of sports betting in California could bring in $200 million to $300 million in tax revenue in the first year alone, $500 million in the second year, and between $800 million and $1 billion annually when the market is mature, Dodd said.

Dodd’s proposal would allow tribal casinos and the state’s major horse racetracks to operate sports wagering at their establishments and via mobile phone apps. It would require strict third-party age and identity verification.

So far, the tribes have refused to come to the table, Dodd said—and a major sticking point concerns online and mobile betting.

“They don’t want online [sports betting], and unfortunately, online is about 80 to 85 percent of the market,” Dodd said. “The state really doesn’t realize anything if we only have bricks-and-mortar.”

In his May budget revisions, Gov. Gavin Newsom, facing a $54 billion budget shortfall for 2020–21 in the wake of the COVID-19 pandemic, urged legislators to find new sources of revenue, and warned massive spending cuts are on the horizon.

The bill would also allow the governor to negotiate a cut of banking and percentage games, such as craps or roulette, which are currently not legal in the state, but would be allowed at the casinos if the proposal passes.

The Morongo Casino Resort and Spa, a tribal-owned casino, awakens with the San Jacinto Mountains in the background, near Cabazon, Calif., on June 29, 2007. A proposed bill to legalize gambling in California is opposed by Native American tribes. David McNew/Getty Images

Tribal Casinos Argue Against the Bill

James Siva, chairman of the California Nations Indian Gaming Association, and Edwin Romero, chairman of the Barona Band of Mission Indians, representing dozens of tribes, strongly opposed SCA-6 at an earlier Senate Appropriations Committee hearing on June 9.

Siva called SCA-6 “a bill that seeks to reward elicit practices at the state’s commercial, for-profit cardrooms and hide behind the tribes and the COVID-19 crisis to reach that end.”

“Allowing commercial cardrooms to continue what are currently illegal practices is essentially rewarding these businesses for bad behavior, which is a non-starter in any discussion regarding gaming expansion in California,” Siva wrote in a May 31 letter addressed to Dodd.

The tribes have faced competition for business from the cardrooms, which offer player-backed games instead of house-backed games. The tribes believe the cardrooms should not be allowed, and allegedly hide profits to avoid taxes.

The letter called online gambling “extremely problematic for the Tribes” and stated it is “a practice that our organization opposes.”

Under existing law, it’s questionable whether tribes could accept online wagers placed from outside tribal lands or could implement an effective system in time, which could mean tribes “could be shut out of the state’s online sports wagering market altogether,” Siva said in the letter.

“A robust Indian gaming industry also provides benefits beyond our reservations,” Romero said. In 2016, he said, Indian gaming in the state generated 124,000 jobs and $3.4 billion in ”taxes and revenue-sharing payments to the federal, state, and local governments,” statistics confirmed by the bill.

The tribes also say the state has overestimated how much tax revenue online sports betting will generate, and that it would come too little, too late to ease the costs of the COVID crisis.

“By the time really significant funding comes in, the crisis will have passed—but the damage to local governments will remain and be codified into law,” Siva said at the hearing.

Dodd said he has suggested amendments to tribal leaders, but “they don’t want to discuss it” because they don’t like the online components.

“They’ve got a lot of power in the legislature, and a lot of goodwill that they’ve created over the years with their wonderful benevolence for many communities throughout the state of California. But, at the same time, I think that perhaps they’re thinking that they can win straight-up on a power play,” Dodd said.

Siva did not respond to recent requests by The Epoch Times for comment. His office referred to the May 31 letter as representing his viewpoint.

‘Too High a Societal Cost’

The letter cited problem gambling proliferation, underage gambling, and threats to established tribal brick-and-mortar facilities as serious concerns.

Even without legal barriers to tribal participation in the online sports wagering market, “we believe that online sports wagering imposes too high a societal cost,” Siva wrote.

But Dodd doesn’t think that underage gambling would be any worse than it is now with illegal sports betting, which he says is a $150-billion-a-year industry nationwide.

“With our ability and technology to be able to track people and understand their age and everything else, there are big time protections,” Dodd said. He cited Oregon, New Jersey, Pennsylvania, and Illinois as states with legalized gambling that “don’t have any problems.”

“We’re trying to come up with a creative solution to bring significant dollars into the state of California,” Dodd said.

Dodd sent a list of proposed amendments to tribal leaders on June 16 that involve a staggered introduction of mobile gambling and additional restrictions for cardrooms. But the bill, as it now stands, is set to go before the Senate Appropriations Committee on June 23.