wo California lawmakers on Thursday pitched legalized sports betting as a way to boost state budget, hit by the economic shutdown brought on by the coronavirus pandemic.
State Sen. Bill Dodd of Napa and Assemblyman Adam Gray of Merced are lobbying to put a constitutional amendment on the November ballot that would allow horse racetracks and the casinos run by American Indian tribes to also offer sports wagering, both at their locations and through mobile devices. The lawmakers added implementation details to ACA 16 and SCA 6, which were originally introduced by them in June 2019.
The state would impose a 10% tax on gross revenue for onsite gambling and a 15% tax on mobile or online wagering. The two lawmakers said that could eventually raise $500 million to $700 million, with at least $200 million in the first year, the Associated Press reports. According to projections from PlayCA.com, which analyzes legalized gambling in California, it is a market that has the potential to generate more than $30 billion in wagers annually, and those wagers would generate some $2 billion in operator revenue and $300 million in state taxes each year.
That could help bridge what Gov. Gavin Newsom says is a $54 billion budget deficit caused by the pandemic. “Revenue from sports wagering will help us avoid teacher layoffs and painful cuts. At the same time, it will allow us to regulate a practice that happens anyway,” Dodd said in a statement as lawmakers debated budget proposals. The bills would amend the state constitution to impose taxes on the platform operators rather than directly by the tribes, to avoid sovereignty issues.
The legislation would require safeguards to verify gamblers’ ages and identities, and technology would be used to make sure that mobile gambling devices are physically within California’s borders.
"California is the holy grail of sports betting markets, and not just because of its sheer size," said Dustin Gouker, chief analyst for PlayCA.com. "It appears that legislators are working to put in place a structure that will make California uniquely attractive to every major operator. And because it has the potential to be the largest legal sports betting market in the U.S., ultimately it represents a seismic shift in the industry."
The proposal, like others before it, is controversial in part because of competition between gambling interests including card rooms, which offer table games like blackjack and poker. The legislation would also allow tribal casinos to offer craps and roulette, but the California Nations Indian Gaming Association fears it would aid card rooms by legalizing a practice that the state attorney general last year sought to outlaw.
Card rooms say the attorney general’s regulatory proposal would change the way player-dealer games like blackjack have operated for decades. The tribal casinos contend that those operations have long been illegal and that writing them into law now would amount to “a massive expansion of games” by their rivals.
Association chairman James Siva added that by the time the proposed new revenue surfaces, the economic crisis caused by the pandemic is likely to have subsided. It would take a two-thirds legislative vote to put the Democratic lawmakers’ measure on the ballot, and a majority of voters would then have to approve.
California is considered a market with a lot of potential both because of its nation-leading population and because it has 16 teams among the four major professional leagues. Vice presidents from both the National Basketball Association and Major League Baseball supported the idea during a preliminary hearing on the legislation in January.